The Taguig City Regional Trial Court (RTC) on Wednesday stopped the Manila Electric Co. (Meralco) from pushing through with the competitive selection process (CSP) set to begin this Friday, August 2.
The 72-hour restraining order temporarily freezes Meralco’s bid to bind prospective bidders to supply the power distributor 1,000 MW worth of power via a public bidding process.
In a five-page order promulgated Wednesday, the Taguig RTC found merit in the petition filed by consortium members operating the Malampaya gas field and stopped the CSP for the next 72-hours or until this Saturday.
“Upon posting a TRO bond which is hereby fixed in the amount of P5 million, let a Temporary Restraining Order effective for 72 hours be issued in favor of the plaintiffs-applicants enjoining the respondent Manila Electric Co. from conducting its CSP, under its current Terms of Reference (TOR), including the receipt of bids, the award and the implementation of any award arising from (it),” the RTC said.
The submission of pre-bid documents and conference for the 600-MW supply contract with Meralco would have been this Friday, 1 August, with bid submission lapsing on 9 August this year.
The Taguig RTC acted on a 54-page complaint filed by the members of the Malampaya consortium who argued that Meralco’s bid terms violate the preference given to indigenous natural gas under existing laws and creates a direct threat to the country’s energy security and energy sovereignty.
The complainants said the Meralco CSP was “flawed, skewed or supplier-driven and grossly violative of existing laws, rules and regulations” and wanted the process permanently stopped.
Without a TRO, the petitioners said the bidding will proceed and render the case moot.
The petition argues the CSP “violates the preference given to indigenous natural gas under relevant laws, rules and regulations” given the provisions in the Electric Power Industry Reform Act and orders issued by the Department of Energy giving preference to local natural gas in power generation.
The petitioners also argued the SCP terms of reference “unduly disadvantage power suppliers which use ING (indigenous natural gas) as a fuel source” and power suppliers using indigenous gas are fenced off in the bidding for 600 MW and 400 MW.
The “increased reliance on imported sources of fuel threatens the country’s energy security and energy sovereignty because these are greatly susceptible to a volatile market,” the petition read.
Were the bidding pushed through, this “would put the country in a situation where a significant portion of our power supply is placed in the hands of imported coal and imported LNG (liquefied natural gas), the prices of both are notoriously unstable and extremely subject to external shocks in the market.”
The petitioners also said the CSP does not accurately reflect the so-called least cost available as the terms allow imported LNG and coal-based power plant bidders to use lower reference costs, only to later pass on the higher cost of fuel and actual non-fuel commodity costs to consumers in contrast to bidders using indigenous natural gas that submit an “as-is, where-is” price during the bid.
“The favor being accorded imported LNG and coal would also discourage investors from exploring and developing other oil and gas fields in the Philippines, which is a very high-cost, high-risk activity. Eventually, the Philippines may have no indigenous gas sources to speak of,” the petitioners said.
The petition also said that lack of demand for Malampaya’s supply would necessarily lead to lack of revenue, ultimately hitting the government’s 60 percent revenue share.
Jose Ronald Valles, Meralco senior vice president and head of regulatory management, said Meralco has yet to receive a copy of the restraining order and counter argued the CSP processes are in accordance with rules.
“We would like to stress however that all CSPs for our supply requirements are done in accordance with existing rules of the Department of Energy and the Energy Regulatory Commission. It is our mandate to ensure that we conduct these in a timely manner, as delay will expose our consumers to an unnecessary burden in the amount of billions of pesos in the form of higher power rates,” Valles said.
