SPECIAL REPORT: Bidding row zaps rural power project

(First of two parts)

Rural folk who have yet to enjoy the benefits of electricity will have to continue living in the dark as a government masterplan to energize the country has been derailed for some years now and may not be put back on track in the immediate future.

This ambitious project has been sadly in limbo as it was marred by intrigues, acrimonious exchanges of charges of deceit, interminable debates on legality or illegality of scrapping the result of the bidding process, alleged machinations by vested interests and subsequent lawsuits.

In fact, the winner in the bidding process was granted last Oct. 19 by Manila Regional Trial Court (RTC) Judge Wilfredo Reyes a temporary restraining order (TRO) stopping the government from awarding the contract to another company which had submitted the highest bid and therefore lost in the bidding.

Meanwhile, time ran out on the project, dubbed IPB-80, as the deadline set by the Japanese financial institution for availment of the loan to finance it had lapsed.

As the multimillion-peso project was indefinitely put on hold, officials of the project proponent National Electrification Administration (NEA) found themselves at the receiving end of formal accusations of graft in the Office of the Ombudsman and a civil case in the Manila RTC.

Cited as respondents in both charges were NEA officials led by Energy Secretary Vincent Perez as NEA chairman. The others included Francisco Silva, acting NEA administrator; Leonardo Olano, head of the pre-qualification bids and awards committee; and Eliseo Alampay, Jesus Alcordo and Victor Batungbakal, board members.

The twin charges were lodged by the Manila-based Nerwin Industries Corp., the declared winner of the initial bidding process.

Nerwin claimed it has been losing big money on accrued interests of loans acquired for the company’s cash bond of P26.8 million in connection with the IPB-80 project, involving government procurement of 60,000 wooden electric posts and 20,000 cross arms.

The materials were meant for the installation of power lines to intended service grids in the hinterlands to be implemented by local electric cooperatives.

The project was supposed to be funded by a loan from the Japan Bank for International Cooperation (JBIC) under the Overseas Economic Cooperation Fund (OECF).

JBIC approved the grant of the loan on Aug. 12, 1994 with a soft warning that the rain check would not be forever. Regrettably, the deadline expired this month without the project having gone beyond the biding process.

A source, who requested anonymity, told The STAR that a certain congressman even threatened to oppose any attempts to seek a grace period from JBIC if the contract would go to Nerwin.

Nerwin officials claimed that after winning the bidding fair and square, the NEA kept flip-flopping on the award of the contract with the view of giving it to the highest bidder for no justifiable reason despite clear losses for the government.

The source also alleged that big money changed hands just to undermine the integrity of the bidding process.

On the other hand, NEA officials, citing a report of its private lawyers commissioned to do a post-bidding study on the proposed closure of IPB-80, asserted that Nerwin was disqualified for submitting dubious documents to the pre-qualification bids and awards committee (PBAC).

The report submitted by the Alampay Gatchalian Mawis and Alampay Law Office affirmed an earlier finding by a special three-member committee which ruled that the complaint against Nerwin was "meritorious."

"There is basis to the allegation that Nerwin Industries submitted falsified documents in the technical bid," the lawyers’ report said.

Based on the findings, the NEA allegedly ignored results of the public bidding won by Nerwin, which submitted the lowest complying bid which is P151.48 million lower than the second lowest bidder.

The NEA board also brushed aside an opinion rendered by the Office of the Government Corporate Counsel which ruled that "there is no legal impediment to the implementation of the award of the IPB-80 contract to Nerwin."

The OGCC opinion negated NEA board Resolution No. 5 ratified last March 26 revoking or canceling the contract award to Nerwin in what observers said was meant to pave the way for one or two of the losing bidders, the Tri-State Pole and Piling and Goldpine Industries.

"It defies logic that the NEA should award the project to any entity except the winning bidder," a Nerwin lawyer said.

"If that’s not an irregularity, I don’t know what is," he added.

Furthermore, the setup would give rise to suspicions that unscrupulous NEA officials maintain an unholy alliance with influence peddlers and power brokers who want to cash in on the deal.

Nerwin appeals to Malacañang

With no one to turn to for help, Nerwin tried to seek redress of grievances from Malacañang through Senior Deputy Executive Secretary Waldo Flores.

In its letter of appeal, Nerwin claimed it was "illegally disqualified because of malicious manipulation of corrupt NEA officials."

The letter also cited the OGCC opinion saying Nerwin’s disqualification was "illegal and improper," coming as it did about three years after the bidding.

Ronaldo Tagalog, legal counsel for Nerwin, maintained that awarding the contract to the next lowest bidder would outrightly mean a loss of P151.48 million for the government, representing the difference between Nerwin’s bid and that of second-lowest bidder Tri-State.

Tagalog also argued that if Nerwin would be disqualified, Tri-State or Goldpine should also be disqualified if only for having failed in the bidding process.

The firm quoted the OGCC as saying the purpose and integrity of the bidding will be defeated if it was disqualified at this point, adding that disqualification would only cause further delay in implementation of the project.

The OGCC board has even warned the NEA that it might fall into a legal quicksand by canceling the award of the contract to Nerwin.

The OGCC said nullifying the result of a successful competitive bidding would not only make the NEA vulnerable to legal action for breach of a perfected contract, but more importantly, it would also derail the rural electrification program.

"No less than your letter underscores the urgency of proceeding with the project, with the JBIC setting March 30, 2001 as the deadline for the resolution of the problems attending the project," the OGCC noted.

The JBIC has informed NEA that it would be "extremely difficult" to get an extension of the projected loan.

Earlier on, the NEA defaulted in the availment of a World Bank loan in connection with IFB-78 which also involved acquisition of wood poles and crossarms.

Experts also warned that international financing institutions would view with suspicions any new loan applications or loan extension for NEA because of its inability to pursue foreign-assisted projects with set time frames and to conduct objective and impartial public bidding.

Meanwhile, the materials and equipment worth $42 million already delivered for the IBP-80, including trucks, electric meters and substations remained idle and rotting as they were exposed to the elements.

Even efforts by Aktimas Sbn. Bhd., Nerwin’s Malaysian supplier, to save the project proved futile. A Philippine representative of the firm said they are now in a quandary insofar as IPB-80 is concerned, saying the NEA’s interminable flip-flopping on the project does not sit well with efforts of the national leadership to attract more foreign investors.

To resolve the controversy and save the project, Nerwin urged Malacañang to take matters into its hands and order the NEA to proceed with the award of the contract. (To be concluded)