Petilla flies to Korea to solve Angat issue

Energy Secretary Carlos Jericho L. Petilla is flying to South Korea this week to personally “negotiate” with Korea Water Resources Corp. (K-Water) to expedite the turnover of the 218-megawatt Angat hydroelectric power plant (HEPP) to the leading water resources and power firm in South Korea.

Petilla’s visit to the Korean firm’s headquarters was meant to address the numerous issues and concerns raised by K-Water in its May 3 letter to state-run Power Sector Assets and Liabilities Management Corp. (Psalm).

“I am meeting [them], about some issues on the [turnover of the Angat power plant]  and how we can have an amicable settlement to make sure everybody will benefit from it,” Petilla explained.

“Because I am about to negotiate, I cannot tell you the details of what we are going to talk about. But what we are looking for is something beneficial to all parties involved… If you satisfy K-Water and you satisfy the government, it will be a win-win situation. That’s what we are looking for,” he added.

The energy chief added that he is targeting to resolve the issues at the soonest possible time.

Based on the “private and confidential” letter of K-Water to Psalm, the Korean firm wanted the Metropolitan Waterworks and Sewerage System (MWSS) to cancel the bidding for the rehabilitation, maintenance and operation of the Auxiliary Units 4 and 5, which can both generate a combined 28 megawatts.

It likewise pointed out the disparity in the pronouncements of Psalm, which said that the rehabilitation of the Angat Dam will be shouldered by the government, and MWSS, which “publicly” took the position that the proposed works will be paid for by K-Water.

K-Water also lamented its exclusion from the discussions of critical issues concerning the “Water Protocol,” which contained the rules and procedures for the releases of water from the Angat Reservoir for irrigation, municipal and domestic uses, and power generation.

“The foregoing changes to the Asset Purchase Agreement, the [operation and maintenance] agreement and the Water Protocol are not acceptable to us,” K-Water noted.

The South Korean firm is also asking for a reduction in the purchase price as the Angat hydroelectric power plant had allegedly deteriorated from the time K-Water made a bid in 2010.

It can be recalled that K-Water submitted in a bidding held in April 2010 the highest offer of $440.8 million for the Angat power plant, besting some of the biggest power players in the country like First Gen Northern Energy Corp., San Miguel Corp., SN Aboitiz Power-Pangasinan Inc., Trans-Asia Oil and Energy Development Corp., and DMCI Power Corp.

“The Angat HEPP deteriorated since the bid submission date mainly due to PSALM’s failure to operate it in the ordinary course of business,” K-Power said.

K-Power likewise asked the government to pay P300 million worth of unpaid municipal property taxes by Psalm and state-run National Power Corp.

“This will bring a severe burden to K-Water as the municipal government signaled difficulties in the buyer’s obtaining permits and licenses until the taxes are fully paid,” K-Water said.

“The foregoing critical issues require immediate attention and close cooperation by Psalm, as a seller who implements the bidding procedures for the transaction. However, to our regret, Psalm did not address our concerns and questions… Furthermore, it entered into an agreement which might infringe on our rights and obligations without informing us and has refused to provide a copy of it despite our repeated requests,” K-Water stressed.