Water rights issues may delay APC P5.5-billion project

Unresolved water rights issues may causes a delay in the 27.5-megawatt Tamugan hydroelectric project of Aboitiz Power Corp. (APC) estimated to cost P5.5 billion.

“We have an application for water rights at the National Water Resource Board. We have a pending environmental clearance certificate and we cannot move until we get that,” APC president and CEO Erramon Aboitiz said.

Aboitiz said the company is still resolving some issues with Davao City Water District so as not to affect its hydropower development plan in that province.

Based on the initial plan, APC will put up three run-of-river hydro power plants with a combined capacity 34.5 MW.

Late last year, APC abandoned the seven megawatt Suawan hydro project due to inability to get permits from the National Water Regulatory Board.

The move brought down the project to P5.5 billion from the original estimate of P6 billion to P7 billion.

According to Aboitiz, they are encountering a similar dilemma with the Tamugan project which may affect the company’s ability to secure financing for the project, thus delaying its construction.

He noted that the Tamugan project is still undergoing public hearings at the NWRB.

APC’s subsidiary Hedcor Tamugan Inc. will undertake the Tamugan hydropower project. Hedcor Tamugan is part of a consortium that won the competitive bidding for the 12-year agreement to supply electricity to Davao Light and Power Co. Inc. supposedly starting August this year.

The Tamugan hydro project will reportedly threaten the water supply in the city but APC said it is optimistic that they could find a win-win solution to this concern as Davao would certainly need additional power this year.

APC has started negotiations with several banks for the financing of the Tamugan project last year.

The Tamugan and Sibulan hydro projects in Davao were granted tax incentives by the Board of Investments such as a six-year income tax holiday and reduced import duties on capital equipment. The Sibulan hydro project is expected to be completed by August 2009.