Issue of December 8, 2019
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City, Kaltimex Inc poised to forge compromise agreement
by Aileen P. Refuerzo / PIO

The city government and Kaltimex Energy Philippines, Inc. are poised to forge a compromise agreement that would settle the court case for the rescission of the latter’s contract for the rehabilitation and operation of the Asin mini-hydro power plants.

City Administrator Bonifacio dela Peña reported to the management committee meeting led by Mayor Benjamin Magalong that they are now finalizing the terms of the accord which will set the amount to be paid by Kaltimex as “liquidated damages” and the grace period the city will give the company to make the plant operational.

Kaltimex won the bid for the rehabilitation, upgrading, expansion, operation, and management of the three mini-hydropower plants of the city located in Asin, Tuba, Benguet and entered into a memorandum of agreement with the city on Jan. 30, 2015 which was confirmed by the city council on Feb. 9, 2017.

It however was unable to comply with its contractual obligations under the MOA as it failed to start the implementation of the project and later refused to heed the succeeding demand letters of the city to remit its monetary obligations then computed as P68.1 million thus prompting the city to file a civil case for the cancellation of the contract with damages.

In August, Kaltimex Energy Philippines Executive President Engr. Jurist Awal served to the new city leaders their intent to pursue the project with an offer to pay part of its computed obligation in exchange for the withdrawal of the case.

Based on the draft compromise agreement, Kaltimex will pay the city P13,633,500 as liquidated damages and will reimburse the filing fee incurred by the city in Civil Case 8957-R.

It will also replace and update its performance bond of P150M with a new bond.

Kaltimex will also take physical possession of the plants and will be given four months to make them operational.

Last week however, the city received a letter from the company requesting to extend the period to five months.  

The draft accord further stipulates that the city will withdraw the case upon the company’s payment of the damages and filing free.

Kaltimex will also be bound to “faithfully comply and abide with the terms and conditions of the compromise agreement as well as the MOA dated Jan, 30, 2015.

Its failure or refusal to comply will entitle the city to “extrajudicially terminate” the MOA, to file appropriate court cases and to forfeit the performance bond in its favor.

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