In the new power contracts, the pass-through provision should be removed, according to a high-ranking former official of the Department of Energy.
The provision which has burdened consumers for years since the independent power producer contracts during the term of the late President Fidel Ramos kept electricity users at the mercy of power plant operators.
During the term of President Rodrigo Duterte, the competitive selection process which has the aim of obtaining the lowest possible prices was strengthened.
The energy official said that the best option for bid aspirants is to hedge on their business projections to prevent losses from piling up.
The source said that it has been a practice of San Miguel Corp. to use the regulatory system and even the whole government to its advantage.
Recently, to back its petition for tariff adjustments, the conglomerate’s unit San Miguel Global Power warned that it may halt supplying electricity if the ERC does not grant its rate petition.
Also, in the bid for the Cavite-Laguna Expressway project, it signed an agreement with the Department of Public Works and Highways that has a provision in which it will not file a protest in the event of a loss.
Nonetheless, it filed a complaint immediately afterward saying its bid would have been higher if it was accepted in spite of a technicality which was the submission of erroneously dated bank documents.
Not only did it file a protest when it promised not to, but SMC’s power unit also filed the protest straight to Malacañang where they paid a filing fee of only P4,000.
The proper venue for the protest, however, was the DPWH bid committee. The difference, however, is that San Miguel Global Power would have been required to deposit 10 percent of their bid or around P2.5 billion in cash in the duration of the protest.
Unfortunately, the late President Noynoy Aquino accepted the protest over the strong objection of DPWH Secretary Babes Singson who even offered his resignation as a result of the overstep.
Singson was prevailed not to resign but Noynoy ordered a rebid. Predictably, SMC submitted a higher bid but to his embarrassment, he still lost since the original winner, in all frustration, decided not to participate in the rebidding.
CALAX was eventually won by the MVP Group.
When it bid and won the independent power producer administrator agreement for the Ilijan power plant and then threatened to withdraw from the contract due to the terms it agreed to at the beginning but found disadvantageous to them later as the situation changed primarily as a result of the health emergency.
When the PSALM did not agree to the carve-out, SMC stopped paying based on the terms as it incurred a debt of more than P20 billion which prompted President Rodrigo Duterte to call out SMC in a strong speech. SMC got the patented Duterte scolding, the way the abrasive language induced flag-carrier Philippine Airlines paid up P6 billion in tax liabilities.
SMC also paid P6 billion but under “quiet protest.” SMC’s arrears were the result of the difference between what it insists as the fees based on the Power Supply Agreement with Meralco and not the price quoted at the Wholesale Electricity Spot Market that is provided under the PSA.
Since then, SMC’s debt has ballooned again to over P24 billion.
(To be continued)