DOE submits report on violations of WMPC, Zamcelco to Malacañang

By Lenie Lectura – May 24, 2019
from Business Mirror

THE Department of Energy (DOE) has submitted a preliminary report to Malacañang on the violations committed by Western Mindanao Power Corp. (WMPC) of the Alcantara-led Alsons Power Group and Crown Investments Holdings Inc., the investor-manager of the Zamboanga City Electric Cooperative (Zamcelco).

“We have the audit findings. Pinadala na namain sa Malacañang. This issue has reached Malacañang already and we were asked to submit a report,” DOE Assistant Director Redentor Delola said.

WMPC and Crown Investments signed on May 2 a compromise agreement in a bid to put to an end the rotating brownouts in the city.

Under the compromise, Crown will give a partial payment of P220 million to WMPC. Upon receipt of the payment, WMPC will run its plant for 60 days. This compromise agreement is without prejudice to the respective claims of both parties before the Energy Regulatory Commission (ERC).

“It’s the ERC that directed them the 60 days. So, the ERC should have come up with a decision in 60 days,” Delola said.

Despite the interim settlement, Delola said the agency was still directed by Malacañang to submit an audit report.

The report covered the initial findings of the DOE.

“Zamcelco and Crown have violations on operating gensets because those did not have any Certificates of Compliance [COC],” Delola said, adding such move is not considered an emergency case since there is an available power plant which Zamcelco can tap power from.

When WMPC cut Zamcelco’s power supply, the latter installed power generator sets as stopgap measure pending the resolution of their dispute.

“We fast-tracked the operation of the gensets of Zamcelco to address the sudden withdrawal of WMPC power supply last February 4,” said Henry Virola, chief management officer of Crown-Desco.

“Zamcelco has a COC to operate 16 MW of gensets since 2018. We are in the process of expanding this COC to accommodate the additional gensets.”

Delola said WMPC also committed a violation.

“WMPC did not exercise the provision in the contract that if there is a dispute, there is a 60-day or 90-day curing period when there is no disconnection. WMPC did not exercise that,” the DOE official said.

The DOE official also noted there had been cases in the past when WMPC continued to supply power to Zamcelco even if its obligations had reached P600 million. “The amount was not material, but there are questions on the WMPC side. That was not the biggest collectible. It reached P600 million before pero there was no disconnection. At that time, there was no Crown yet,” Delola said.

The DOE would need to submit a complete report that will include recommendations.

“We are still awaiting data from Zamcelco. With this information, we can finalize report and can come up with a recommendation of what the National Electrification Administration and everybody involved will do,” the DOE official said.

Zamcelco awarded last year an investor-manager contract (IMC) to Crown Investments and Desco Inc. to take over the former’s operations. The joint venture submitted a bid worth P2.5 billion and formally took over Zamcelco on January 9.

“We’re reviewing the IMC, which is supposed to improve the operations of the distribution utility.

But we found out during the audit, the arrangement was that Crown will take care of generation while Zamcelco will still handle the distribution business. We will validate, but that’s part of the audit findings.”