Meralco bidding process could undercut SC ruling – Zarate

By Ellson Quismorio

Bayan Muna Party-List Rep. Carlos Zarate welcomed on Friday the Supreme Court’s (SC) move to uphold its decision rejecting the 90 Power Supply Agreements (PSAs) that failed to undergo bidding, and requiring distribution utilities (DU) like Meralco to bid out its supply agreements.

 Bayan Muna partylist Rep. Carlos Isagani Zarate (Bayan Muna Partylist / FACEBOOK / MANILA BULLETIN)
Bayan Muna partylist Rep. Carlos Isagani Zarate (Bayan Muna Partylist / FACEBOOK / MANILA BULLETIN)

But in spite of the positive development, Zarate felt compelled to warn the High Court about the power distribution giant’s supposed move to work around the landmark SC ruling.

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“While we welcome the announcement of the Supreme Court yesterday of the finality of its decision to require all distribution utilities (DUs) including Meralco to bid out its supply agreements, we wish to inform the Court [that] the procedure being employed by Meralco could defeat its decision because it grants Meralco full control of the bidding process and allows it to self-deal with its affiliate companies,” said Zarate, who serves as House Deputy Minority Leader.

According to him, Meralco could invoke Department of Energy (DOE) Circular 2018-02-003, which effectively excluded the government agency from supervising the bidding, thus allowing Meralco itself to control the bidding process.

“While the original DOE Circular DC2015-06-0008 requires a third party auctioneer recognized by the DOE to oversee the competitive selection process (CSP), DC 2018-02-003 no longer requires [a] DOE-recognized third party, thereby ousting the DOE from ensuring that no irregularities and self-dealing will take place in the CSP or bidding,” Zarate said.

“We also take to task the DOE for suspiciously and voluntarily relinquishing its power to oversee the bidding process,” stressed the Davao-based solon.

In its ruling last May, the SC struck down the PSAs and ruled that all power contracts submitted by DUs before the Energy Regulatory Commission (ERC) on or after June 30, 2015 must undergo the required CSP.

The rejected PSAs included the seven contracts from Meralco subsidiaries proposing the construction of construction of coal-fired plants under questionable terms.

For one, Zarate claimed that the “onerous” contracts would burden consumers with P930 billion in additional power rate costs had they been approved by the ERC. The power deals have a duration of 20 to 21 years.

Neri Colmenares, Bayan Muna chairman and former congressman, claimed that Meralco was rushing the bidding process in order to make it difficult for suppliers–other than its affiliates–to reasonably bid for the PSA.

“Meralco recently announced that its pre-bid conference for three huge supply contracts totaling nearly 2,800 megawatts (MW) shall be held today, August 9, 2019, which practically disadvantages suppliers who are not Meralco affiliates. Meralco is rushing the bidding of the three contracts on September 11, 2019 when in fact the supply project is scheduled in 2024.

“This rush makes it nearly impossible for bidders to make a sound and intelligent bid with barely a month to prepare, unless the supplier was given advance information by Meralco,” explained Colmenares.

He said that Bayan Muna will file a bill in the current 18th Congress that will require genuine independent consumer presence in all boards and other major bodies of public utilities.

“In the meantime, we urge the Supreme Court or the DOE to step in and issue rules that will require third party supervision in the bidding,” he said.