NIA approves hydro plants’ O&M deal
Friday, August 11, 2006
By MYRNA M. VELASCO
The National Irrigation Administration (NIA) has finally approved the 25-year Operation and Maintenance (O&M) Agreement which sets the terms for the agency taking responsibility over the irrigation and other non-power components of the 100-megawatt Pantabangan and 12-MW Masiway hydro power facilities after their privatization.
The announcement was made by Energy Secretary Raphael P.M. Lotilla; noting that this clears the way forward on the much-anticipated sale of the two hydro power plants.
The Power Sector Assets and Liabilities Management Corporation (PSALM) has set September 7 as the deadliest target date for the opening of bids; though current bulletin still schedule it August 31; counting on the interest of at least seven investor-groups.
The O&M agreement will have to be signed by NIA and the buyer of the Pantabangan and Masiway hydro assets; with the conformity of the National Power Corporation.
This shall be rendered effective for a term of 25 years commencing on the closing date as prescribed under the Asset Purchase Agreement; and will be renewable for another 25 years under such terms and conditions as may be agreed mutually by the parties.
As set forth in the terms of the agreement, NIA ¡§shall perform and be responsible for the management, operation, maintenance and rehabilitation of the non-power components (i.e. the dams that supply the water to the generation units, reservoir, appurtenant structures and watershed area) and undertakes to perform and accomplish the duties and obligations specified.¡¨
For services rendered, the buyer of the facilities shall pay a service fee to NIA which would be equivalent to P0.0389 per cubic meter of water used (for Pantabangan) and P0.0055 per cubic meter of water used (for Masiway) to generate electricity, computed on a monthly basis.The service fee shall be subject to an adjustment computed annually but implemented and applied only once every two years; from and after the closing date.
For the collected service fees, it was stipulated under the O&M agreement that a ¡§Trust Fund¡¨ shall be established within the first two years in an amount equivalent to P100 million; and this will also serve as the maintaining balance, with NIA ensuring that all withdrawals shall be promptly replenished. It was further prescribed that the buyer of the assets shall pay the amount set in the Trut Fund in 24 monthly payments and shall be billed by NIA, in addition to the monthly service fee, during the first two years of the O&M covenant.
The agreement also allots a portion of the service fee for a working fund to be deposited by NIA in a bank and shall be made readily available; and shall be promptly withdrawn shall the need for it arises.
The deal also prescribed standards on how the nonpower components of the hydro assets, including water releases, shall be handled and operated by NIA, so it will not trigger any undue disruption to their electricity generation functions.
It was explicitly stated that ¡§NIA shall not cause any interference or disturbance to the conduct of the buyer’s business operations and shall inform the buyer in advance should it see factors that might disrupt efficient run of the facilities.
The future owner of the Masiway-Pantabangan plants, jointly or separately with PSALM and/or NPC is to be allowed by NIA ¡§to periodically inspect the physical condition of the non-power components and the records pertaining to its condition,¡¨ including those relating to maintenance, operation and rehabilitation.
NIA has also been mandated to submit a five-year medium term and a tenyear long-term capital expenditure program for the operation and maintenance of the non-power components.
Meanwhile, in case of emergency (which could refer to circumstance or occurrence that may threaten to affect human life or may cause imminent danger to the environment or community), NIA or the asset buyer ¡§can take immediate action without prejudice to the subsequent findings of the oversight committee as to the party who should bear the costs and expenses of the repair, rehabilitation or restoration of the property or removal of any obstructions.¡¨ (MMV)
posted by philpower @ 8:13 AM,
