BACOLOD City – Primelectric Holdings, Inc. / Negros Electric Power Corporation (NEPC) answered all the queries of Bacolod City’s Mayor Alfredo Abelardo Benitez on the distributor’s joint venture agreement (JVA) with Central Negros Electric Cooperative (Ceneco).
The JVA was executed to improve power distribution service in the cooperative’s franchise areas covering the cities of Bacolod, Bago, Talisay and Silay; and the towns of Murcia and Don Salvador Benedicto in Negros Occidental.
Last month, Primelectric – the sister company of MORE Electric and Power Corporation (MORE Power), the sole power distributor in Iloilo City – led by president and chief executive officer Roel Castro, presented the salient points of the JVA before the mayor and members of the city council at the Bacolod City Government Center.
Following this, Benitez wrote a letter to the concerned parties dated June 30, asking about several points.
These included the P2-billion capital expenditure, stable power rates within two years, upgrading Ceneco facilities, and value-added tax.
“Primelectric has signified its willingness to partner with Ceneco through NEPC and invest the needed capital and financial resources to provide the technical expertise and experience required to expand and modernize the distribution system in the franchise area of Ceneco, to meet the exponential growth and rapidly increasing power demand, and to improve electricity distribution services to consumers therein,” Castro’s response letter to Benitez read.
Primelectric’s initial analysis of the situation in the franchise area led to the preparation of a P2-billion investment for five years from its takeover of the distribution responsibility.
However, Castro said, “Some people interpret the fact that there is no specific mention of P2 billion in the JVA to mean that there is no P2 billion commitment. They are mistaken.”
He added that there was no mention of “P2 billion” because the investment requirement could be more than the said amount.
According to Castro, providing stable power is an obligation of every distribution utility under the Electric Power Industry Reform Act (EPIRA).
“This is a given as a matter of law. This provision on providing stable power is not mentioned in the JVA because it is a legal and regulatory requirement imposed on NEPC (not a mere contractual commitment),” he stressed.
He added: “This will emphasize that the distribution of power to end-users is a highly regulated public utility subject to many regulatory requirements of the Energy Regulatory Commission under EPIRA.”
Primelectric, Castro said, is mandated to comply with all legal requirements and regulatory standards, including the regulations of our electricity rates.
Likewise, Primelectric, under the JVA, is committed to upgrading Ceneco facilities to provide stable power within two years from the purchase and takeover and to be able to expand and modernize the distribution in the franchise area, he added.
Meanwhile, charging a value-added tax (VAT) is required by the Bureau of Internal Revenue, Castro said, adding that the cooperative itself is also required to pay VAT for its generation, transmission and distribution charges.
The JVA is an asset purchase agreement that provides the terms and conditions under which NEPC will acquire the electric distribution system of Ceneco and how NEPC will pay for this electric distribution system.
Thus, other than the clear statement of intent and reason for the transaction in the JVA, regulatory aspects of the project rely on existing laws and the franchise that Congress may grant, Castro explained./PN
