Alsons Power unit urges Zamcelco to honor supply deal

MANILA, Philippines — Alsons Power unit Western Mindanao Power Corp. (WMPC) is urging beleaguered Zamboanga City Electric Cooperative Inc. (Zamcelco) to honor its obligations under a power supply deal to resolve its power issues.

The power supply agreement (PSA) between WMPC and Zamcelco is binding as it was provisionally approved by the Energy Regulatory Commission (ERC),  said Alsons Power vice president for project development Joseph Nocos.

“The WMPC and Zamcelco PSA is effective. It was issued a provisional authority. The three years of continued operations have rendered the PSA effective,” he said.

However, WMPC was forced to stop its operations last February because it had already exhausted its fuel reserve and Zamcelco has not called the power supplier to dispatch supply for the city.

This is also because of the refusal of Crowninvestment Holdings Inc. and Desco Inc.—the holder of investor management contract (IMC) for Zamcelco—to settle contractual obligations and pay for electricity already supplied and paid for by its consumers.

Zamcelco’s debt has already ballooned to P467 million from October 2018 to February this year.

Nocos said 70 to 80 percent of Zamcelco’s debt obligations to WMPC is fuel.

The non-payment of contractual obligations has prevented WMPC from procuring the fuel needed to run its power plant which provided the voltage support needed by Zamboanga City.

Since the forced stoppage of WMPC’s operations, unscheduled power outages ranging from one to six hours have become a daily occurrence in Zamboanga City as the National Grid Corp. of the Philippines (NGCP) has been struggling to maintain grid stability in the Zamboanga Peninsula. 

“Without the reactive power support provided by WMPC, there will always be blackouts in the city despite the abundance of power supply in the Mindanao grid,” Nocos said.

“The immediate solution to the power problem in the city is to allow WMPC to operate its power plant because it is designed to provide not only capacity but stability to the grid as well – unlike Crown’s generator sets which are ineffective and expensive,” he said.

Crowninvestments has been justifying its refusal to pay by claiming that the WMPC-Zamcelco PSA is not effective and that WMPC overcharged the EC.

According to the EC, WMPC actually overbilled P441 million in the past three years which should be refunded. It claimed that the conditions of the PSA have not yet been met, which include the lack of final approval by the ERC and the attainment of an A rating from the National Electrification Administration (NEA).

However, WMPC asserted that these allegations had no contractual and legal bases.

“WMPC never overbilled Zamcelco. The amounts billed and paid for were calculated in accordance with the payment formula provided for in the PSA between Zamcelco and WMPC,” Nocos said.

The PSA was implemented by both Zamcelco and WMPC on Dec. 12, 2015, where in the power coop had called on the power supplier to dispatch supply and the generator had been delivering the energy requested.

It was only upon the entry of Crown-Desco last January that the PSA was unilaterally stopped.

The deadlock between WMPC and Zamcelco is scheduled for hearing at the ERC today.

Alsons Power Group is the umbrella brand of the power business affiliates of the Alcantara Group.