Bantayan Island Power Corp. said Monday it served Bantayan Island Electric Cooperative Inc. a notice of execution of management services agreement after the cooperative allegedly failed to pay its obligation amounting to P116.5 million.
BIPCOR said in a statement while it issued a final demand on the outstanding accounts to BANELCO in October 2020, the latter had not settled the obligation.
It said the MSA is an option open to BIPCOR as a means to enforce collection of overdue accounts when BANELCO is in default.
BIPCOR said Article 8.5.3 of the power supply agreement with BANELCO provides that if the coop’s payment default is in excess of 90 days, BANELCO will enter into a management services agreement with BIPCOR’s nominee, who will be empowered to take over management of BANELCO.
This is one way to make sure that accounts of the coop are properly managed and obligations are met, it said. BIPCOR said the provision is another level of assurance to the supplier that under the PSA, the power it delivers will be paid in full and on time.
BIPCOR said the unpaid accounts consisted of the supply under the second amendment where an additional 3 megawatts was contracted by BANELCO and the interim power supply agreement where diesel generation sets were rented by BIPCOR at the request of BANELCO.
BIPCOR said 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.
It said the amount due under the second amendment was P53.8 million while in the interim power supply agreement amounted to P62.7 million, or for a total of P116.5 million.