Non-per­form­ing en­ergy con­tracts face DOE ax

Manila Bulletin - - Business News - By MYRNA M. VE­LASCO

he Cen­tral­ized Re­view and Eval­u­a­tion Com­mit­tee (CREC) of the Depart­ment of En­ergy (DOE) is in­sti­tut­ing pol­icy on au­to­matic ter­mi­na­tion of en­ergy con­tracts ren­dered to have been “fail­ing” on their sub­mit­ted work pro­grams.

The depart­ment’s C-REC noted that such shall ap­ply to ser­vice con­tracts (SCs) in re­new­able en­ergy projects, petroleum as well as coal op­er­at­ing con­tracts.

The DOE stated “C-REC shall im­ple­ment au­to­mat­i­cally the con­tract pro­vi­sions on the ex­pi­ra­tion of term or ter­mi­na­tion as stip­u­lated in var­i­ous con­tracts.”

It noted in par­tic­u­lar that most en­ergy project con­tracts carry “au­to­matic ter­mi­na­tion clause;” and such is the pre­cept that the depart­ment has been opt­ing to au­to­mat­i­cally im­ple­ment.

In a res­o­lu­tion of the DOE body chaired by En­ergy Un­der­sec­re­tary Donato D. Mar­cos, it was fur­ther stip­u­lated that “no show-cause or­der shall be nec­es­sary to ter­mi­nate the re­spec­tive con­tracts is­sued to de­vel­op­ers who ei­ther failed to per­form their re­spec­tive obli­ga­tions and/or whose pre-de­vel­op­ment stage have al­ready ex­pired.”

For in­stance, in petroleum ser­vice con­tracts, project pro­po­nents are re­quired to sub­mit seven-year work pro­gram, hence, if they can­not keep pace with the de­vel­op­ment time­lines sub­mit­ted, it was ex­plained that their SCs may al­ready be con­cluded.

That is with the ex­cep­tion of ser­vice con­tracts though wherein de­lay­ing fac­tors have been be­yond their con­trol – such as the en­force­ment of drilling mora­to­rium at “con­flict ar­eas” within the West Philip­pine Sea.

For RE con­tracts, de­vel­op­ers are bound to un­dergo pre-de­vel­op­ment phase prior to ad­vanc­ing their re­spec­tive ven­tures to com­mer­cial fruition.

In many cases at pre-de­vel­op­ment stage, projects are ei­ther hob­bled by non-vi­a­bil­ity of tar­geted re­source or sti­fled by ex­cru­ci­at­ing ap­proval pro­cesses es­pe­cially at host com­mu­nity lev­els – hence, project time­lines are of­ten breached.

Ter­mi­na­tion as well as can­cel­la­tion of busi­ness deals had al­ready been re­sorted to by the en­ergy depart­ment in the past- chiefly for non-per­form­ing ven­tures if reck­oned on work pro­grams un­der their ser­vice con­tracts.

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