Bayan Muna wants probe on sale of power barges

CAGAYAN DE ORO (MindaNews/11 May) –- The militant party list Bayan Muna has called for a thorough investigation on the alleged anomalous sale of two government power barges in 2010 to Therma Marine, Inc., a subsidiary of Aboitiz Power Corporation.

Bayan Muna partylist Rep. Carlos Isagani Zarate said the transaction done by public bidding  led to a “huge financial loss” for the state-owned National Power Corporation (Napocor).

But Zarate stressed that consumers in Mindanao ultimately became “the biggest loser” because the 200 megawatts of electricity that the barges could produce were no longer available to the Mindanao grid.

“Aboitiz used the power from the barges to sell electricity directly to the electric cooperatives whereas before, government was selling it at cheaper rates,” he said.

Bayan’s accusation came as Mindanao cities reel from six to 10-hour daily brownouts as supply from the Agus and Pulangi hydroelectric power plants, the island’s major source of electricity, dwindled with Lake Lanao and Pulangui’s waters already at critical levels.

As of 6 a.m. Sunday, May 11, Mindanao’s power situation outlook was 938 MW system capacity for a system demand of 1,132MW or a deficit of 194.

On May 7, when power outages in the cities of Davao and Cagayan de Oro reached 7.5 hours, the deficit was 389MW. By May 8 it went down to 354 MW, on May 9 it was 277 and by May 10 was at 208.

Since Unit 2 turbine of STEAG State Power’s coal-fired power plant went online evening of May 7, and the Western Mindanao diesel power plant’s 100-MW which underwent maintenance also went online, rotating brownouts have become shorter – an hour in Cagyaan de Oro and none in Davao City since May 9.

Direct sale

Wilfredo Rodolfo III, Aboitiz communication officer, declined to comment on Bayan Muna’s allegation but confirmed that their company sells the electricity produced by the two barges directly to Mindanao’s electric ooperatives.

He said the sale of electricity is done through “bilateral sales agreement”  between Aboitiz Power Corporation and the electric cooperatives.

Aboitiz Power Corporation is the sole power distributor in Davao and Cotabato cities and sells electricity to cooperatives all over Mindanao.

Contrary to allegations that Aboitiz is not utilizing the barges, Wilfredo said Therma Marine has been operating the two barges as baseload plants when Mindanao started experiencing a shortage in the supply of electricity last week.

Wilfredo said transactions between Aboitiz and electric cooperatives were done directly and not through the Interim Mindanao Electricity Market or IMEM.

The House Committee on Energy had earlier passed a resolution for the suspension of the IMEM after Mindanao leaders and electric cooperatives expressed their opposition to the measure during a public hearing in Cagayan de Oro on March 4.


Jose Edgardo Uy, former legal counsel of the Cagayan Electric and Power Light Company (CEPALCO), who opposed the sale of the barges, echoed Bayan’s call for investigation.

“What is anomalous is that the selling price was much lower from the valuation price done by Napocor on the two barges. Why was the sale price so low?”  Uy asked.

Uy, who now heads Cagayan de Oro’s Task Force Hapsay Dalan said the two barges– PB 117 moored in Nasipit, Agusan del Norte and PB 118 moored in Maco, Compostela Valley —were each capable of producing 100 megawatts and were bought by Nap in case of a shortage in hydro power.

“The power crisis today could have been averted if the barges are still owned by the government or Napocor,” Uy said.

Napocor bought the two power barges in the early 1990s following a power crisis that nearly crippled Mindanao businesses when a powerful El Nino dried up Lake Lanao and Pulangi River.

The barges were supposed to fill the vacuum if the supply of hydro power become unstable.

Following the huge financial losses incurred by Napocor, Congress passed the Electric Power Industry Reform Act of 2001 (EPIRA) or Republic Act 9136 mandating the privatization of the electric industry in the country.

Only 30-M US dollars

EPIRA also mandated the government through the Power Sector Assets and Liabilities Management Corporation  (PSALM) to sell all generating assets owned by Napocor including power barges 117 and 118.

In its disclosure to the ERC and the Security Exchange Commission, Aboitiz said its subsidiary Therma Marine won the negotiated bid for the two barges at a bid price of US$16 million and US $14 million or for a total of US $30 million in 2009.

That year, Mindanao had ample supply of electricity and there were no other bidders to oppose Therma Marine’s offer except for the opposition filed by CEPALCO and some Mindanao electric cooperatives.

Therma Marine paid US $16 million or P739,467,200 million for power barge 117 and US $14 million or P 651,233,800 million for the other barge, 118. The prevailing exchange rates in February and March 2010 were US $1- P46.2167 and US $1- P46.5167.

The Aboitiz subsidiary took over the operations of  PB 117 and 118 on Feb. 6 and March 1 , 2010 and renamed it as M1 and M2. The two barges are still moored in its original location in Barangay Sta. Ana, Nasipit town in Agusan del Norte and in Maco, Compostela Valley province.

P30-M for a value of P90-M

Uy questioned why the final sale price fell to US $30 million when Napocor had valued the two barges at US $90 million.

“There was a huge difference in the valued price and the actual sale,”  Uy said.

Zarate said they are looking into reports that in the sale of some government assets by PSALM, only 25% was paid while the balance is to be paid in 25 years. He said they want to check if this scheme was used in the sale of the power barges to Therma Marine.

Zarate said the government assets were sold supposedly to pay the losses of Napocor.

To the detriment of Mindanao consumers, Zarate said the two barges are being used sparingly by Aboitiz and not as baseload power producers as government had intended them to be.

Zarate blamed EPIRA for pushing government to privatize the power sector and prevent government funds derived from Malampaya from financing big ticket power plants.

“EPIRA is the real problem”

“The real problem is the EPIRA itself and the orgy of privatization of the power sector that it spawned in more than a decade. Contrary to the promised adequate supply and cheaper electricity, what we have now is one of the highest power rates in the world,” Zarate said.

“Under EPIRA, the island’s major government assets were privatized and sold, some for a song, to a few players,” he added.

Zarate said  a major power plant, the 96 MW Mt. Apo geothermal plant was also sold to the Lopez-controlled Energy Development Corporation.

He said government has not invested enough money to rehabilitate Agus And Pulangi plants and left them deteriorating and operating below its rated capacity.

Use Malampaya funds

“The government has not invested money because EPIRA mandates them to sell the Agus and Pulangi plants,” Rep. Rufus Rodriguez (2nd district, Cagayan de Oro) said.

Rodriguez said he opposed the sale of the Agus and Pulangi hydro plants because it would be unwise to put business in charge of the power generating sector.

He said he has sponsored a bill allowing the use of the Malampaya funds to finance the rehabilitation of Agus and Pulangi plants.

He said his bill would also allow the government to finance and develop alternative energy sources like biomass, hydro, geothermal, solar and wind.

“Definitely no coal or diesel. We have to look for cleaner energy sources, “ Rodriguez said.

Another meeting

Rodriguez and the House committee on energy will meet with Energy Secretary Carlos Jericho Petilla in Metro Manila on Wednesday to find a solution to end the Mindanao power crisis.

Petilla met Mindanao congressional leaders last Wednesday in Quezon City but “did not offer any solution” to the power crisis crippling the island.

Rep. Rodriguez said Petilla, who came with top officials of Napocor and PSALM, instead pushed for the adoption of IMEM as the solution to end the power crisis.

“Petilla did not offer any solution. He was asking us to give IMEM another chance,” said Rodriguez.

“Petilla did not go there to offer a solution. Instead he pushed for the IMEM and for the co-ops to buy the expensive modular generating sets,” Zarate said. (Froilan Gallardo/MindaNews)