FICELCO launches latest bid to reclaim Balongbong power plant

FICELCO’S CONTRIBUTION to the rehabilitation of power lines damaged by typhoon Odette in the Visayas, a team of engineers and linemen left the island Monday morning, Dec. 27, 2021, to rendezvous with the other teams from Bicol electric cooperatives before proceeding to the province of Bohol where they have been assigned. FICELCO PIO

Three decades after the Balongbong Mini-Hydroelectric Power Plant was taken over by the National Power Corporation (NPC), the First Catanduanes Electric Cooperative, Inc. (FICELCO) is once again actively seeking the recovery of the power plant.

Last Dec. 13, 2021, General Manager Raul Zafe and Board President Dir. Rodulfo Vargas transmitted to Administrator Emmanuel Yaneza of the National Electrification Administration (NEA) and Secretary Alfonso Cusi of the Department of Energy (DOE) a recent resolution of the FICELCO Board of Directors appealing to the two agencies to intervene in the issue.

Board Resolution No. 143, series of 2021, calls on DOE and NEA to direct NPC to recognize the cooperative’s petition to reclaim ownership of Balongbong MHPP and cause its legal transfer to FICELCO.

The move is the latest effort of the cooperative to recover the power plant that it built with government loans and equipment from China in the 70’s.

At the time, FICELCO owned and operated the Balongbong power plant and the Marinawa diesel plant.

GM Zafe said that since 1996, the co-op has consistently manifested its intent to reclaim the Balongbong MHPP based on the fact that it was the rightful owner until it was sold and transferred to NPC in 1988.

“For over three decades, FICELCO had been purchasing power supplied by BMHPP on a rate that was not prescribed on the original MOA, thus depriving the people of Catanduanes the chance to afford cheap electricity and thereby defeated the very purpose of the turnover,” he stated.

During that span of time, Zafe stressed, NPC had already recovered way above the amount paid for the transfer, with the cooperative having paid more than P558 million for purchased power to date.

“With the impending decommissioning of NPC generating facilities in the province of Catanduanes, we are confident that it is only just and right to finally transfer the ownership and operation of the BMHPP to FICELCO,” he said.

He underscored that the return of the plant to the cooperative will surely facilitate various financing options that would realize the safer and more productive utilization of BMHPP in providing least-cost electricity services to the people of Catanduanes.

It may be recalled that on May 1, 1988, then Pres. Corazon C. Aquino proclaimed the implementation of P2.50/kwh rate in island grids, including Catanduanes, and mandated NEA and NPC to implement it.

That presidential directive paved the way for the reassumption by NPC of generation functions in the island that FICELCO had assumed ever since NPC ceased its operation.

Under intense pressure from NEA which took over the management of the co-op and facing subtle threats from NPC that it would not reassume generation functions if the ownership of BMHPP is not transferred to it, the FICELCO Board grudgingly yielded to the demands and transferred ownership of the plant in August 1988.

NPC paid only P35 million to gain possession of the power plant.

However, the P2.50/kwh power rate guaranteed under the agreement prevailed for only two years, after which the rates skyrocketed, defeating the very reason why the Board agreed to the transfer.

As early as 1996, FICELCO had indicated to NPC its desire to reacquire the Balongbong power plant, but then GM Segundo Gianan Jr.’s request for negotiations was rebuffed by NPC management.

In February 1997, Pio Benavidez, a Batonhon who was then officer-in-charge of the Strategic Power Utilities Group (SPUG), informed Gianan that NPC could not negotiate the sale of the plant “in view of its tremendous importance in the stability of the electricity supply of the province.”

Benavidez claimed that the loss of Balongbong would further increase NPC losses due to the high subsidy cost of its operation in Catanduanes.

In reply, GM Gianan averred that the take-over by NPC of FICELCO’s Balongbong plant is void or rescissible for violation of the 1988 FICELCO-NEA-NPC Memorandum of Agreement, such as NPC’s lack of just compensation to FICELCO for the transferred assets and stipulated price subsidy.

In 2006, during the tenure of GM Carlos Gianan III, the Board passed a resolution manifesting to the DOE its intent to recover ownership of the plant.

Apparently, nothing came out of this attempt to start discussions on the matter.

In 2013, during the term of GM Samuel Laynes, FICELCO sent letters to Pres. Benigno Simeon Aquino and NPC Pres. Froilan Tampinco on the issue of the plant’s recovery.

Laynes pointed out that since 1988 until that time, the co-op had bought P400 million worth of power that the BMHPP had generated, but at the higher rates that NPC imposes on power generated by its diesel plants, in line with its one-grid, one-rate policy.

“We find it ironic that through the years, the people of Catanduanes were deprived of the benefits that they would have derived from the BMHPP considering that a natural resource of the province, which is water, is what keeps the BMHPP on generating power, which should be much cheaper than the power that diesel plants generate, as they run on fossil fuel,” GM Laynes emphasized.

He said that the very key to substantial reduction of power rates in Catanduanes is the repossession by FICELCO from NPC of the Balongbong MHPP.

“With the co-op operating the BMHPP, the rates for its generated power could be untangled from the NPC’s one-grid, one-rate policy, and ultimately result in much lower electricity rates than before in the Catanduanes Grid…,” Laynes stressed.

In a separate letter to NPC, he reminded then Pres. Gladys Sta. Rita that the BMHPP sits on parcels of land donated to FICELCO for the sole purpose of enabling it to own and operate said plant.

“Transfer of the BMHPP to a party other than FICELCO will violate the deed of donation and cancel the donation itself, thereby making the transfer to a third party null and void,” GM Laynes underscored.

Again, nothing came out of this, as even Benavidez, who would take over as NPC president, had told the GM that the issue of BMHPP is non-negotiable.

The Balongbong plant produces a maximum of 2.1 megawatts, which is about one-sixth of the island’s peak load of 12 mW.

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