COA calls out DOE for non-implementation of P22-B e-trike project

MANILA, Philippines — With one year left before the scheduled completion of its P21.672-billion electronic tricycles or e-trikes project, the Department of Energy has yet to distribute even a single unit of the vehicles to the intended beneficiaries, the Commission on Audit said.

In an annual audit report recently published on its website, the COA said that as of Dec. 31, 2016, only P77,791,419.85 or 0.35 percent of the total project cost of P21.672 billion has been disbursed.

The COA said that of this disbursed amount, only P14,398,023.17 was allocated for project implementation activities while P63,393,396.68 was for the payment of commitment charges and interests incurred due to the project's delayed implementation.

The COA noted that it was on Sept. 27, 2013 when the government, through the Department of Finance signed two loan agreements and a grant agreement with the Asian Development Bank (ADB) for the implementation of the “Market Transformation through Introduction of Energy Efficient Electric Vehicles (E-Trikes) Project” with a total cost of P21.672 billion or US$504 million.

The project includes delivery of 100,000 e-trike units to selected Local Government Units to replace the internal combustion engine (ICE) tricycles; creation of a lithium-ion battery supply chain by creating an initial substantial market; establishment of pilot off-grid and grid-connected charging stations; and collection and proper disposal of the replaced tricycles and used batteries.

The COA said that under the agreement, the E-Trike Project's implementation was effective on Jan. 1, 2013 and scheduled to be completed on Dec. 31, 2017.

The COA said that the DOE, as the executing agency, was supposed to sign memoranda of agreement with the Land Bank of the Philippines to finance the payment of the e-trikes that will be procured from the contracted suppliers and as well as with the LGUs for the e-trikes' distribution to their local tricycle drivers.

“However, the MOAs have not been signed as of December 31, 2016,” the COA said.

The audit body further noted that despite the absence of the MOAs, the DOE bid and awarded the contract for the supply of 3,000 e-trike units to Uzushio Electric Company Ltd. on Feb. 15, 2016.

Under the agreement, 1,200 e-trike units shall be delivered within three months after the contract signing and the remaining 1,800 e-trike units shall be delivered within three months thereafter.

“As of year-end, however, no e-trike has been delivered,” the COA said.

The COA said that with the continued delay in the utilization of the ADB loans, the government has already incurred a total of P87,486,821.16 commitment charges and management fees “as a result of non-delivery of the expected outputs”.

“It should be emphasized that the E-Trikes Project has not delivered a single e-trike unit to its intended beneficiaries after four years from its effectivity and with only one year remaining before the scheduled project completion,” the COA report read.

“With less than a year remaining for DOE to implement the project, and considering the complexities and challenges that the Project has gone through, we are concerned that the expected project outputs would not be delivered and consequently, the project objectives would not be attained,” it added.

The COA said the sustainability of the project is now “in jeopardy” as the cost per unit of the e-trikes has already increased from around P250,000 to currently around P455,000.

The COA pointed out that this will be “very costly for the local tricycle drivers who will be required to pay the same over a period of five years.”

The COA recommended to the DOE to hasten the implementation of the project or otherwise, revisit its feasibility, “and if necessary, recommend the cancellation of the loans as soon as practicable to avoid further incurrence of commitment fees and other financial charges.”

In its reply letter, the DOE management informed the COA that the National Economic and Development Authority Investment Coordination Committee (NEDA-ICC) has already approved the DOE's request for the cancellation of at least US$359.76-million worth of ADB loans for the E-Trike Project.

The DOE said it has also submitted a revised Project Implementation Plan which is currently awaiting approval of the NEDA-ICC.