By Alena Mae S. Flores – March 21, 2018 at 09:35 pm
The municipality of Pagbilao lifted the cease-and-desist order it earlier issued against Pagbilao Energy Corp.’s 420-megawatt coal-fired power plant in Quezon province.
“The revocation of the CDO means that PEC is not barred from proceeding with the scheduled commercial operations of its power plant,” Aboitiz Power Corp. said in a disclosure to the stock exchange Wednesday.
Pagbilao Energy is a joint venture of Aboitiz Power’s subsidiary Therma Power Inc. and TPEC Holdings Corp.
Pagbilao Energy invested close to $1 billion to put up the power plant called Pagbilao 3, adjacent to the existing units 1 and 2 of the Pagbilao power station in Quezon province.
The municipality of Pagbilao issued a CDO on Feb. 27, 2018 allegedly because of Pagbilao Energy’s refusal to sign a memorandum of agreement on corporate social responsibility.
“PEC is working with the municipality of Pagbilao for the issuance of its business permit, and also on the few remaining steps necessary before the start of the PEC plant’s commercial operations,” Aboitiz Power said.
The municipality also ordered the dismissal of the case against Pagbilao Energy.
Pagbilao Energy informed Aboitiz Power that on March 7 the Pagbilao municipal council revoked the CDO and that the case it filed against the municipality was dismissed.
The town earlier required the company to execute a memorandum of agreement implementing CSR programs for an amount above the company’s approved budget for CSR.
According to Pagbilao Energy, the municipality refused to issue the business permit without the executed MOA and instead issued the CDO.
“PEC therefore filed the application for injunction and obtained the TRO to prevent the municipality from implementing what PEC believes to be an unwarranted cease and desist order,” Aboitiz Power said.
Pagbilao Energy said the execution of the MOA was not a part of the published and legal requirements for the issuance by the municipality of a local business permit.
The company said the power plant had received all the endorsements required from the relevant local government units including the Quezon provincial government, the municipality of Pagbilao and the host barangay of Ibabang Polo.
It said all clearances and endorsements from national government agencies, such as the Department of Energy, and the Department of Environment and Natural Resources, were also secured.
Pagbilao Energy filed a petition for injunction with prayer for TRO with the regional trial court of Lucena City. The court issued an order dated Feb. 28 asking the municipal mayor of Pagbilao to cease and desist from implementing the assailed CDO.
After due notice and hearing, the court extended the effectivity of the TRO on March 2 from 72 hours to 20 days, or from the date of the original issuance of the TRO.
Aboitiz Power said that on March 7, the municipality of Pagbilao revoked the CDO and on the hearing on the same date, the parties moved for the dismissal of the case, which the court granted.
Pagbilao Energy tapped Mitsubishi Hitachi Power System Ltd. and Daelim Industrial Co. Ltd. for the engineering, procurement and construction contracts for the power project, which is set to be completed this year.
The project is partly funded by a loan amounting to P33.3 billion that was secured by the company through joint arrangers BDO Capital and Investment Corp., BPI Capital Corp. and First Metro Investment Corp.