Business: ‘DOE Cancels Century Peak Contract on Kabankalan River’

Governor Alfredo Marañon Jr. said the Department of Energy (DOE) has reportedly cancelled the service contract of Century Peak Energy Corp. on Hilabangan River in Kabankalan City for its feasibility study on building a hydroelectric power plant there.

Marañon said he had called the Office of Energy Secretary Jose Rene Almendras to follow up the list of companies granted exclusive service contracts by the DOE to make feasibility studies on hydroelectric power potentials of Negros rivers, and his assistant informed him that the agency has cancelled the contract of Century Peak for such purpose.

But the governor told reporters Monday he will still confirm if indeed the DOE has cancelled the contract of Century Peak.

According to its website, Century Peak is proposing to build a mini-hydroelectric power plant in Hilabangan River in Kabankalan.

It listed as its geographic location two cascade sites covering Barangays Carol-an and Tanawan, all in Kabankalan, with rated combined capacities of 13.8 megawatts (MW).

In September last year, Marañon and his chief of staff and Provincial Legal Officer Jose Ma. Valencia had met with Almendras in Manila to request the DOE to grant exclusive service contracts on hydroelectric power plant projects in Negros to serious and legitimate investors only.

Valencia earlier said they had discussed with Almendras the problems on granting the service contracts to companies that had not even coordinated with the local government units for the said project.

Some of these firms had not even been sent their representatives to meet with the concerned local government units, and had not conducted pre-feasibility studies on the hydroelectric power potential of the rivers as required, he said.

“We have discovered that all the rivers of the province have been issued service contracts by the DOE under the Renewable Energy Act.

These service contracts deterred other investors from putting hydro-electric power plants in those areas,” Valencia had said.

Valencia added that bigger and more capable power companies have already conducted feasibility studies in the rivers of Kabankalan, Bago, and Sagay cities but these companies were not able to secure service contracts from the DOE because other companies have secured the contracts ahead of them.

Valencia said Almendras told them that under the Renewable Energy Act, the service contracts expire two years after their issuance, so we expect them to expire this year (2011), Valencia said.

The DOE had issued service contracts to these companies in 2009 so the contracts will expire this 2011, he added.

The governor has asked Almendras that after these contracts expire, the DOE grant the new service contracts to legitimate investors, Valencia said.

Serious investors endorsed by local government units can begin their detailed engineering studies, he added.

If there were no existing contracts given to other firms, interested investors could have completed engineering studies this year so construction of the plants could start next year, Valencia added.

Marañon had announced earlier that three hydroelectric power plants, with a combined production of 67 megawatts, are expected to be built in Negros Occidental.

These are the 40-megawatt hydroelectric power plant in Bago City, a 15-megawatt plant in Carol-an Kabankalan City, and a 12-megawatt cascading plant in Sagay City, the governor had said.

Officials of Conal Holdings, Alto Power Management Corp. and Alstom Philippines have expressed interest in constructing the hydroelectric plants in Negros Occidental, the governor said.

In May this year, Valencia said they were told that the DOE will assess the exclusive service contracts it granted to all power generating companies for the construction of hydroelectric power plants in Negros Occidental and will likely cancel some if found to have violated some requirements set by the agency.

“The DOE will open the areas to those who are really interested and serious and who has the capability, both financially and technically, to operate hydro-electric plants,” he earlier said.

Moreover, the DOE has enough grounds to cancel the service contracts of smaller companies that beat the bigger companies in getting the contracts, because one of the conditions in the service contract is to immediately inform the concerned local government unit of their operations in their rivers.

The operation of hydro-electric power plants in Negros Occidental is very important to the province, Valencia said, because as what Almendras said, “We need a power plant in Negros Occidental very badly and we must act now or face a serious power shortage.”

Almendras said that with the double digit growth of Negros Occidental, it will need to have its own power plant operating by 2015 to meet its increased power demand, Valencia said.

Moreover, Almendras said Negros Occidental must have its own source of power because the submarine cables transmitting power to the province may be too overloaded to transmit its increased demand in the future, Valencia added.*DBDangcalan