Philreca slams new DOE rules on procurement

MANILA, Philippines — The country’s umbrella group for electric cooperatives (ECs) has slammed the new procurement rules of the Department of Energy (DOE), which it claimed would disrupt the power distribution sector.

The 121-member Philippine Rural Electric Cooperatives Association Inc. (Philreca) questioned the rules that scrapped the Swiss challenge mode in bidding, which limits the mode of obtaining projects solely through competitive bidding.

Philreca said the new rules would have “unfair and disruptive effects” particularly with regard to power distribution utility participants in ongoing bidding and compliance processes.

“If the department is determined to adopt this new procurement tact, it should at least be fair and apply the new rules prospectively and not retroactively, as those who are already actively undergoing compliance procedures should not be affected and prejudiced,” said Presley de Jesus, president of Philreca.

“We want clarity and consistency in the power sector procurement policy. We also do not agree with the DOE that we need to start from scratch again. Many of our EC members are already undergoing the selection process. It’s illogical and wasteful in terms of time, energy and precious funds already spent if we are to be told to begin all over,” De Jesus added.

In a Swiss challenge mode of procurement, the offer of the original proponent is subject to a challenge by another supplier. If there is a challenger with a lower bid or offer, the original proponent has the option to match the lowest bid.

Under the new guidelines, DOE mandated all distribution utilities with pending or ongoing competitive selection processes (CSP) to start anew, in compliance with the revised procedure.

According to the DOE’s  Legal Service, for ECs with ongoing CSP, the EC or the original proponent in cases of CSP through Swiss challenge cannot claim any “vested right,” thus there is a need to redo the process.

The new rules also run against President Duterte’s preference for Swiss challenge.

De Jesus said the President is a vocal advocate of the use of the Swiss challenge mode in government projects as a way of avoiding corruption.

Philreca has also raised concerns over the  DOE’s plan to let third party electricity providers enter their franchise area.  It said only a few ECs are non-performing, and the operational inefficiency of these power coops are due to uncontrollable events such as natural calamities, political strife, insurgency and topographic challenges.

By 2022, the DOE targets to have 100 percent electrification with the National Electrification Administration, National Power Corp. and distribution utilities.