MSA served on BANELCO
BANTAYAN Island Power Corp. (BIPCOR) recently served Bantayan Island Electric Cooperative, Inc. (BANELCO) a Notice of Execution of Management Services Agreement (MSA) after the coop failed to pay its obligation to BIPCOR amounting to P116.5M.
Final demand on the outstanding accounts was made on BANELCO in October last year.
The MSA is an option open to BIPCOR as a means for enforcing collection of overdue accounts when BANELCO is in default.
According to BIPCOR, Art. 8.5.3 of their Power Supply Agreement with BANELCO provides that if the coop’s payment default is in excess of 90 days, BANELCO shall enter into a Management Services Agreement with BIPCOR’s nominee who shall 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.
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.
The alleged unpaid power in these accounts consists of the supply under the 2nd amendment where an additional 3MW was contracted by BANELCO and the interim power supply agreement where diesel gensets were rented by BIPCOR at the request of BANELCO.
At that time, 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.
The amount due under the 2nd amendment is P53.8 million while in the IPSA it is P62.7M for a total of P116.5 million.
