02 October 2003
The Freedom from Debt Coalition (FDC) urges the Senate Committee on Government Corporation and Public Enterprises to continue exposing the anomalies behind the controversial Caliraya-Botocan-Kalayaan-IMPSA power project in Laguna. FDC also urges the Senate Committee to hold the involved parties liable for their actions.
The Senate hearing scheduled on 01 October 2003, but which was postponed, should pave the way for the anomalous contract’s immediate cancellation. The bribery case against former Justice Secretary Hernando Perez that is being probed by the Senate Committee in relation to the IMPSA deal is a big reason for involved authorities and companies to buckle down and try to secure their investments.
Those involved in the anomalies are aware of the grave threat to the validity of the contract. We are not surprised to learn that of all questionable IPP contracts, IMPSA – the most controversial and anomalous – was among the few contracts that the Power Sector Assets and Liabilities Management Corporation (PSALM) had already renegotiated as early as May this year. And now, in the midst of the bribery issue hounding the CBK power contract, PSALM talks about the purported savings from the renegotiation with CBK Power Co. – a joint venture partnership between IMPSA of Argentina and Edison Mission Energy of California.
Other than the bribery issue surrounding the power deal, IMPSA’s financial and technical incapability to undertake the CBK project has also been in question. This illustrates that the CBK contract is a can of stink half-opened and ready for resolution.
At the very start, IMPSA did not pre-qualify to undertake the CBK-BROT. It did not meet the minimum technical and financial requirements and it lacked necessary legal documents required by the terms of reference. Despite this, NPC insisted on pushing with the contract with IMPSA.
Further, there were irregularities in the signing of the contract. The CBK contract signed on 06 November 1998 carries contentious provisions such as performance undertaking, accession undertaking, and allowable downtime -- provisions previously disallowed by the NEDA-Investment Coordination Committee – redounding to the benefit of the IPP.
Furthermore, the Supplemental Agreement signed on 14 September 1999 appears to be invalid. NPC forged a Supplemental Agreement with IMPSA even before the original CBK contract took effect on 07 February 2001. The original contract only became effective after financial closure was achieved as a result of the Department of Justice opinion rendered by then Acting Justice Secretary Perez on 20 January 2002. Purportedly, US$2-million changed hands in exchange for the DOJ opinion.
The CBK-IMPSA contract is overpriced and has resulted into added financial burden to taxpayers and consumers. IMPSA would recover some US$50 million for rehabilitating Unit 2 for a mere US$500,000. Furthermore, IMPSA would recoup some US$30 million for repairing Unit 1, compared with the cost of less than US$8 million in repairs.
We also call on the Executive Department to show its political will and resolve in bringing down the unnecessary financial burden of the onerous and anomalous IPP contracts such as CBK-IMPSA by cancelling the contract.