A power supplier of Bantayan Island Electric Cooperative Inc. (BANELCO) in Cebu has demanded payment of P116.5 million of outstanding obligations that the utility firm allegedly failed to settle under their supply deal.

The ‘notice of execution’ under a management services agreement was formally served by supplier-firm Bantayan Island Power Corporation (BIPCOR) to BANELCO, and had also urged the latter to pay the duly calculated arrears.

According to BIPCOR, “final demand on the outstanding accounts was made on BANELCO in October last year, but to date, BANELCO has not yet settled its obligations.”

The power firm explained that the MSA “is an option open to BIPCOR as a means of enforcing collection of overdue accounts when BANELCO is in default.”

BIPCOR emphasized that under Article 8.5.3 of the power supply agreement (PSA) previously inked by the parties, in case of payment default of the off-taker utility, which in this case is BANELCO -- and if this will lapse beyond 90 days, “BANELCO shall enter into a MSA with BIPCOR’s nominee who shall be empowered to take over the management of BANELCO.”

BIPCOR expounded that this is a legal remedy it resorted to, so as “to make sure that accounts of the electric cooperative are properly managed and obligations are met.”

That provision in their supply pact, it was further noted, likewise takes “another level of assurance to the supplier that under the PSA, the power it delivers will be paid in full and on

time.”

BIPCOR qualified that the “unpaid power in these accounts consist of the supply under the second amendment where an additional 3.0-megawatt was contracted by BANELCO and the interim power supply agreement where diesel gensets (generating sets) were rented by BIPCOR on the request of BANELCO.”

Correspondingly, the demanded payment in the 2nd amendment of their supply deal had been pegged at P53 million; while the interim agreement warranted payment of P62.7 million.
BIPCOR further narrated that “at the time, electricity in Bantayan Island was in short supply and critical because BANELCO’s demand forecast did not anticipate the steep rise in the island’s power demand.”