Inquiry on city deal with kaltimex to continue

BAGUIO CITY – The City Council inquiry on the City's floundering deal with Kaltimex Energy Philippines Inc. for the development of the Asin mini-hydro power plants will continue even as the Body discussed options to rescind the contract.

The Body decided to invite Kaltimex chairman Krishan Kumar Ralhan to its next session to air the company's side on its failure to implement the multi-million peso project despite the confirmation of the contract on January 30, 2017.

City Legal Officer Melchor Carlos Rabanes, a member of the city's Special Bids and Awards Committee (SBAC) whom the Body invited and consulted on the legal avenues that the City may undertake to rescind the contract, said they are currently preparing actions for the cancellation of the contract either directly based on Kaltimex's manifestation of withdrawal from the project dated May, 2017and its subsequent failure to implement the project or through judicial means.

Councilor Peter Fianza said the Council needs to come up with a letter terminating the relationship with Kaltimex to enable the City Legal office to start the cancellation proceedings.

However, some councilors expressed doubt if the City will have a solid case against Kaltimex.

Councilor Faustino Olowan said there appeared to be some intervening circumstances that prevented Kaltimex from starting the project which it may raise to defend itself from the impending cancellation case like the failure of the City to transfer to its name the ownership of the plants thereby preventing the company from securing all the permits and the pending cases for water rights and that of the lot owners whose properties are affected by the operation.

Mayor Mauricio Domogan last April 11, 2018, sent a final demand to Kaltimex for the payment of the fees with damages based on the contract which amounted to P13,644,500.

"It has been more than a year since the confirmation of your contract to operate the (hydros) and we have repeatedly demanded performance of your obligation... but very insignificant steps were undertaken by your Company t comply with the same," the mayor noted.

"The last letter you sent us for the extension of three months up to March 2018 to submit a joint inspection report but again nothing has been done yet this activity that should have been conducted immediately following the confirmation of the contract."

The mayor asked the firm to settle the amount on or before April 30 and reminded the company that the performance bond amounting to P150 million is set to expire on October 10, 2018.

The City Council passed Resolution No. 219, series of 2011 approving the terms of reference and pro-forma contract for the privatization of the Asin minihydro power plants.

The Body later approved Resolution No. 037, series of 2017 that confirmed the memorandum of agreement dated 30 January 2015 entered into by and between the local government and Kaltimex on the rehabilitation, upgrading, expansion, operation and management of the city-owned plants.

It can be recalled that the local government took over the operation of the three plants after the expiration of the city's 25-year agreement with the Aboitiz-owned Hydroelectric Development Corporation (HEDCOR) sometime in 2006 and the local government was able to earn some P30 million annually from the continuous operation of the said plants. – Aileen P. Refuerzo

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