DOE: 21 contracts of Solar Philippines face termination

The Department of Energy (DOE) on Thursday said it is set to discontinue 21 or half of the 42 service contracts it awarded to Solar Philippines following the company's alleged failure to carry out its energy commitments.

The DOE made the announcement at the Senate finance subcommittee hearing on the agency’s budget after Senate President Pro Tempore Jinggoy Estrada inquired about the matter.

“Twenty-one of the contracts are already being processed for termination because they are not able to deliver the scheduled targets of the work program,” Energy Undersecretary Rowena Cristina Guevara said at the hearing.

Estrada said different renewable energy companies were awarded a total of 473 service contracts for the construction of solar farms as of last March, supposedly for 32,359 megawatts of renewable energy supply.

He said that only 174.41 megawatts or 2% had been completed and started commercial operations of the 10,000 megawatts committed by Solar Philippines and its affiliates.

“The vast majority of the total commitment have not yet entered the development stage and remain in various phases of pre-development. How will this affect the department's targets?" the senator asked.

He was referring to the Iba-Palawig project, Iba-Palawig 2 project, and San Marcelino phase 3 project.

Guevara said that acquisition of land, either through lease or purchase, is the most challenging part of energy companies in constructing power facilities.

“Previously, possessory rights were not required when we issued service contracts. However, under the new guidelines, developers must have possessory rights before service contracts are granted," she said.

Estrada, however, inquired specifically as to why Solar Philippines, owned by businessman Leandro Leviste, was taking too long to adhere with the terms of its service contracts compared with other developers.

“You know, my conclusion is that while other project developers take an average of around two to three years to develop solar power projects, Solar Philippines and its affiliates have taken more than three years to even take its projects to development phase and much longer for actual construction,” the senator said.

“Bakit masyadong pinagkakatiwalaan itong Solar Philippines? (Why put so much trust with Solar Philippines?) Why do you keep on awarding contracts to them?” he added.

Guevara said 22,000 megawatts of capacity were already fully developed or are in development of 32,359 megawatts covered by service contracts.

“The remaining 10,000 megawatts depend on Solar Philippines, which could significantly compromise the DOE's ability to meet its commitment to transitioning to renewable energy. I hope you seriously consider this matter," Estrada said.

Senators Pia Cayetano and Sherwin Gatchalian also inquired about delays in the commitments indicated in the service contracts.

According to Guevara, the DOE would issue new sets of terms of reference for its succeeding green energy auctions, to include the performance of renewable energy companies as qualifying conditions.

“We are going to be issuing the terms of reference soon. The performance or non-performance of projects will be included,” Guevara said at the budget hearing.

GMA News Online reached out to Solar Philippines for comment but has yet to respond as of posting time.—Jamil Santos/AOL, GMA Integrated News