WMPC to supply power to Zamcelco for 60 days

By Lenie Lectura – April 29, 2019
from Business Mirror

WESTERN Mindanao Power Corp. (WMPC) and Crown Investments Holdings Inc., the investor-manager of the Zamboanga City Electric Cooperative (Zamcelco), agreed over the weekend that the former would resume the supply of power to the electric cooperative.

This developed after the Energy Regulatory Commission (ERC) “convinced” both parties to enter into a compromise agreement, pending resolution of the dispute between Zamcelco and WMPC.

“The ERC convinced the parties to enter into a compromise for a period of 60 days. We have been asked to pay partially two invoices that are pending. In the meantime, WMPC will run their power plant during this compromise situation, which dramatically lessens the frequency of brownouts,” Crown representative Jomar Castillo, a lawyer, said. This is Crown’s third offer of partial payment to cover for WMPC’s operational and fuel costs. The first offer of P150 million was made in February. The second offer of P220 million was made on April 3. WMPC rejected both offers.

Zamcelco and WMPC have been locked in a dispute since the new management of the power co-op discovered that WMPC overbilled it in the amount of P441 million over three years. WMPC suspended its supply to the city within days of Zamcelco’s notice to WMPC regarding this irregularity.

This discovery led to Crown-Zamcelco’s refusal to pay outstanding invoices from WMPC, as the overpaid amount more than covers the balance.

For this compromise offer, Crown agreed to pay the outstanding invoices for October and November 2018, amounting to approximately P204 million. Following receipt of this sum, WMPC will immediately run its plant for 60 days. Crown also said it will begin to nominate power from WMPC on April 29.

The compromise will not affect the motion that Zamcelco filed with the ERC on April 6. Zamcelco had contested WMPC’s billing of contracted capacity, which accounted for the overpayment.

The motion claimed for the refund of the overbilled sum of P441 million, as well as the confirmation of the withdrawal of the application for the PSA between Zamcelco and WMPC. The motion argued the PSA between the two had never been in effect because two conditions for effectivity had not yet been met: the ERC’s approval of the PSA, and an “A” rating from NEA resulting from the awarding of the investment-management contract to a private utility.

“The compromise is without prejudice. All the pending incidents before the ERC will continue,” Castillo said.

The compromise agreement will be submitted to the ERC by Monday. Upon receiving permission, WMPC can begin running its plant to supply power to Zamcelco.

The joint venture of Crown and Desco Inc. won the investor-management contract for Zamcelco with a P2.5-billion bid. This capital infusion allowed the cooperative to settle P1.2 billion of its outstanding debts, and invest in upgrades that allows the new Zamcelco to continuously work towards zero blackout in Zamboanga City.