Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

SIXTEENTH CONGRESS
First Regular Session

2621

House Bill No.

Introduced by: REPRESENTATIVE CELSO L. LOBREGAT

AN ACT CREATING THE MINDANAO POWER CORPORATION (MinPOW),
PROVIDING FUNDS THEREFORE, AND FOR OTHER PURPOSES

EXPLANATORY NOTE

Republic Act No. 9136 or the Electric Power Industry Reform Act (EPIRA) of 2001
which liberalized and privatized the power industry, was aimed at securing the country’s power
supply and reducing cost of electricity through greater competition and efficiency. It was
intended to free the government from subsidizing capital-intensive power projects, and allow
instead the private sector to put up these crucial projects. Thus, the law directed the government
to privatize or sell its power generation assets and the capacities it contracted with the
independent power producers (IPPs). However, more than a decade after the law’s enactment,
power outages, particularly in Mindanao, continue to be experienced by consumers.

The most concrete effect of the EPIRA specific to Mindanao is the treatment extended to
the Agus-Pulangui Hydropower Complexes. The Agus-Pulangui Hydropower Complexes
continue to bring low power rates in Mindanao. For the first 10 years of EPIRA’s enforcement,
Mindanao’s Agus and Pulangui hydroelectric power complexes, located in Lanao del Sur and
Bukidnon provinces, respectively, were exempted from privatization. The EPIRA provided that
the ownership of the Agus and Pulangui power complexes was to be transferred to the Power
Sector Assets and Liabilities Management Corp. (PSALM), the state agency that was created to
handle the privatization of National Power Corporation’s (NPC’s) assets, and that both would
continue to be operated by NPC. After 10 years, the privatization of the Agus and Pulangui
complexes was to be left to the discretion of PSALM in consultation with Congress, as the law
provided

This bill seeks for the non-privatization of Agus-Pulangui hydropower complexes which
are considered as the crown jewels of the Mindanao power industry, and to formulate a viable
way to operate and maintain these assets that provide majority of the electricity in Mindanao.
‘There were calls to stop the sale of the Agus and Pulangui complexes since these are sources of
cheap power in Mindanao that should not fall into the hands of profit-driven private interest.
Policy should be adopted on the non-privatization of the Agus-Pulangui hydropower complexes
because these are essential to the public welfare of the communities of Mindanao and would be
better left under government control considering their inherently profitable nature, and therefore,
the operation, maintenance, expansion, and/or improvement of such hydropower complexes
could be done with no government subsidy, while sustaining the required level of power supply
in Mindanao.


There are two issues related to the matter, First argument is that non-privatization of the
Agus-Pulangui hydropower complexes would discourage entry of private investors because they
will not be able to compete with low power rates of the hydroelectric complex. The demand for
power in Mindanao has continuously risen through the years with rapid urbanization and
increased industrialization and citing 2013 data from the Department of Energy (DOE), of the
total 1,614 megawatts dependable capacity of Mindanao, 826 megawatts come from hydropower
plants such as Agus and Pulangui, Based on demand projection, there will be a deficit of 280
megawatts by December 2015, validating the need for additional power generation.

Second, there is an allegation that Mindanao electric cooperatives and consumers refuse
to share the burden in the costs of power. This bill addresses this concern by having a Mindanao
Power Corporation (MinPOW) with regulated rates that enable it to raise (a) sufficient funds for
buying Agus-Pulangui from NPC/PSALM; (b) sufficient finds for operating and maintaining
such assets efficiently; and (c) sufficient funds for improving such assets; and also (d) provides
for the Mindanao Power Fund, which ensures lessening subsidy by the National Government in
any power crisis situation

The creation of the MinPOW was first proposed by the Mindanao Development
Authority (MinDA) during the 2012 Mindanao Power Summit. The Philippine Chamber of
Commerce and Industry (PCCI) immediately expressed its support considering that the Agus-
Pulangui hydro plants are Mindanao’s patrimony and should be in government hands.

It is the government’s duty and responsibility to promote the economic development of
the country, particularly the Mindanao region, and the availability of electricity at reasonable

cost as a catalyst for economic growth.

In view of the foregoing, approval of this bill is earnestly sought

Qe. ie oe Caer
CELSO L, LOBREGAT

Representative
‘Zamboanga City, 1" District


Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

SIXTEENTH CONGRESS
First Regular Session

House Bill No.

2621

Introduced by: REPRESENTATIVE CELSO L. LOBREGAT

AN ACT CREATING THE MINDANAO POWER CORPORATION (MinPOW),
PROVIDING FUNDS THEREFORE, AND FOR OTHER PURPOSES

Be it enacted by the Senate and House of Representatives of the Philippines in Congress
assembled:

n 1, This Act shall be known as the “Charter of the Mindanao Power Corporation
POW).”

Secti

c

Section 2. Declaration of Policy for the Mindanao Power Situation, ~ Congress hereby adopts
the policy of non-privatization of the Agus-Pulangui Hydropower Complexes because these are
essential to the public welfare of the communities of Mindanao and would be better left under
government control considering their inherently profitable nature, and therefore, the operation,
maintenance, expansion, and/or improvement of such Hydropower complexes could be done
with no government subsidy, while sustaining the required level of power supply in Mindanao.

It is the government’s duty and responsibility to promote the economic development of the
country, particularly the Mindanao region, and the availability of electricity at reasonable cost as
a catalyst for economic growth

‘The creation of an organized corporate entity in Mindanao is necessary to attain these ends.

Section 3. Mindanao Power Corporation (MinPOW) ~ MinPOW (hereinafter referred to es
the Corporation) is hereby created and shall have a term of fifty (50) years from its creation
hereof, which shall be deemed renewed for an equal period unless sooner dissolved by law.

The authorized capital stock of the Corporation shall be One Billion Pesos divided into Ten
Million shares having a par value of one hundred pesos each, which shares are not to be
transferred, negotiated, pledged, mortgaged, or otherwise given as security for the payment of
any obligation, unless approved by the ratepayers of Mindanao in a plebiscite conducted with the
help of Mindanao Electric Cooperatives


The principal office of the Corporation shall be determined by its Board of Directors. It may also
establish such offices, branches, agencies, or correspondents or other units in Mindanao or in
other parts of the Philippines as its business operations may require

The Corporation shall acquire the Agus-Pulangui Hydropower Complexes from the Power
Sector Assets and Liabilities Management (PSALM) on terms that is not more onerous than
‘Twenty-Five (25%) initial down payment with Seventy-Five (75%) to be amortized for Twenty-
Five (25) years.

The Corporation is mandated to extend the benefits of its hydropower complexes to the greatest
number of the population as possible, and the Corporation shall undertake and implement
faithfully such projects as will promote the total electrification of all provinces, cities,
municipalities and barangays existing in the various regions of Mindanao,

Section 4, Powers and General Functions. — The powers, functions, rights and activities of the
Corporation shall be the following:

(a) To have continuous succession under its corporate name until otherwise provided by
law;

(b) To prescribe its by-laws not inconsistent with this Act;
(c) To adopt and use a seal and alter it at its pleasure,
(d) To sue and be sued in any court;

(©) To conduct investigations and surveys for the development of water power in the
Mindanao region;

() To take water from any public stream, river, creek, lake, spring or waterfall in the
Philippines, for the purposes specified in this Act; to intercept and divert the flow of
waters from lands of riparian owners and from persons owning or interested in waters
which are or may be necessary for said purposes, upon payment of just compensation
therefore; to alter, straighten, obstruct or increase the flow of water in streams or
water channels intersecting or connecting therewith or contiguous to its works or any
part thereof: Provided, That just compensation shall be paid to any person or persons
whose property is, directly or indirectly, adversely affected or damaged thereby;

(g) To operate, maintain, repair, rehabilitate, expand and/or improve the Agus-Pulangui
Hydropower Complexes acquired from the Power Sector Assets and Liabilities
Management Corporation (PSALM) under terms and conditions provided in this Act
with authority to sell electric power in bulk to electric cooperatives, distribution
utilities, and other entities in accordance with this Act;

(h) To adopt measures necessary and desirable to ensure sufficiency of power it
committed to electric cooperatives and distribution utilities, and power in Mindanao
in general including the expansion of existing power plants, establishment of new
plants, and contracting of ancillary or support services with other power generators;

(i) To acquire whether by negotiation or by eminent domain, promote, hold, transfer,
sell, lease, rent, mortgage, encumber and otherwise dispose of property incident to, or
necessary, convenient or proper to carry out the purposes for which the Corporation
was created;

() Subject to Constitutional requirements and with mandate from the President,
MinPOW shall have authority to operate idle power plants whether temporarily or
permanently to curb any imminent and actual power shortages;


(k) To construct works across, or otherwise, any stream, watercourse, canal, ditch, flume,
street, avenue, highway or railway of private and public ownership, as the location of
said works may require: Provided, That said works be constructed in such a manner
as not to endanger life or property: And provided, further, That the stream,
watercourse, canal ditch, flume, street, avenue, highway, so crossed or intersected be
restored as near as possible to their former state, or in a manner not to impair
unnecessarily their usefulness. Every person or entity whose right-of-way or property
is lawfully crossed or intersected by said works shall not obstruct any such crossings
or intersection and shall grant the Board or its representative, the proper authority for
the execution of such work, The Corporation is hereby given the right-of-way to
locate, construct and maintain such works over and throughout the lands owned by
the Republic of the Philippines or any of its branches and political subdivisions. The
Corporation or its representative may also enter upon private property in the lawful
performance or prosecution of its business and purposes, including the construction of
the necessary lines thereon: Provided, That the owner of such private property shall
be indemnified for any actual damage caused thereby: Provided, further, That said
action for damages is filed within five years after the rights of way, transmission
lines, substations, plants or other facilities shall have been established: Provided,
finally, That after the said period, no suit shall be brought to question the said rights
of way, transmission lines, substations, plants or other facilities;

(1) To exercise the right of eminent domain for the purpose of this Act in the manner
provided by law for instituting condemnation proceedings by the national, provincial
and municipal governments,

(m)When essential to the proper administration of its corporate affairs or necessary for
the proper transaction of its business or to carry out the purposes for which it was
organized, to contract indebtedness and issue bonds subject to approval of the
President upon recommendation of the Secretary of Finance,

(n) To exercise such powers and do such things as may be reasonably necessary to carry
out the business and purposes for which it was organized, or which, from time to
time, may be declared by the Board to be necessary, useful, incidental or auxiliary to
accomplish the said purpose;

(0) To cooperate with, and to coordinate its operations with those of the National
Electrification Administration and public service entities;

(p) To exercise complete jurisdiction and control over watersheds surrounding the
reservoirs of Agus-Pulangui Hydropower Complexes and other plants and/or projects
constructed or proposed to be constructed by the Corporation. The National Power
Corporation (NAPOCOR) and the PSALM shall upon written advice by the
Corporation, forthwith surrender jurisdiction to the Corporation of all areas embraced
within the watersheds the NAPOCOR currently holds in Mindanao, subject to
existing private rights, the needs of waterworks systems, and the requirements of
domestic water supply. For new projects and upon determination by the Corporation
of the areas required for watersheds for a specific projects in Mindanao, the Bureau of
Forestry, the Reforestation Administration and the Bureau of Lands shall, upon
written advice, surrender jurisdiction to the Corporation of all areas embraced within
the said watersheds, subject to existing private rights, the needs of waterworks
systems, and the requirements of domestic water supply.

(q) In the prosecution and maintenance of its projects, the Corporation shall adopt
measures to prevent environmental pollution and promote the conservation,
development and maximum utilization of natural resources; and


(®) Generally, to exercise all the powers of a corporation under the Corporation Law

Section 5. Disp.

insofar as they are not inconsistent with the provisions of this Act.

tion of Hydroelectric Power — The Corporation shall have authority to sell

the hydroelectricity pursuant to the parameters:

(@) The existing capacity of the Agus-Pulangui Hydropower Complexes shall be

allocated pro rata primarily to electric cooperatives and distribution utilities the
majority of whose customers are residential ratepayers in Mindanao

(b) Consumers other than electric cooperatives and distribution utilities may contract

electricity that has been unsold or uncommitted to Mindanao electric cooperatives
and distribution utilities.

(c) If and when possible, the Corporation is allowed to participate in the Wholesale

Electric Spot Market provided that any and all its income shall be utilized solely for

operating, maintaining, expanding and improving the hydropower complexes and/or
its other assets, and as part of the Mindanao Power Crisis Fund

Existing power supply agreements involving the Agus-Pulangui Hydropower Complexes
shall be renegotiated to comply with the foregoing parameters, Non-committed power generated
by the Agus-Pulangui Hydropower Complexes shall immediately be allocated to electric
cooperatives and distribution utilities that cater mainly to residential ratepayers.

Section 6. Rate-fixing ~ The rates charged by the Corporation shall be subject to approval by the
Energy Regulatory Commission as follows:

1a. Rates shall allow the recovery of just and reasonable costs and a reasonable return on the
rate base (RORB) or other internationally accepted methodology to enable the
Corporation to operate viably. In case the rate setting methodology used is RORB, it shall
be subject to the following guidelines.

iii.

iv.

For purposes of determining the rate base, the Corporation may be allowed to
revalue its eligible assets not more than once every three (3) years by an
independent appraisal company: Provided, however, That ERC may give an
exemption in case of unusual devaluation: Provided, further, That the ERC shall
exert efforts to minimize price shocks in order to protect the consumers;

Interest expenses are not allowable deductions from permissible return on rate
base;

In determining eligible cost of services that will be passed on to the end-users, the
ERC shall establish minimum efficiency performance standards for the
Corporation including systems losses, interruption frequency rates, and collection
efficiency;

Further, in determining rate base, the Corporation shall not be allowed to include
management inefficiencies like cost of project delays not excused by force
majeure, penalties and related interest during construction applicable to these
unexcused delays; and

Any significant operating costs or project investments of the Corporation which
shall become part of the rate base shall be subject to verification by the ERC to
ensure that the contracting and procurement of the equipment, assets and services
have been subjected to transparent and accepted industry procurement and
purchasing practices to protect the public interest.

b. The rate shall ensure that the Corporation would be able to service the acquisition cost of
the Agus-Pulangui Hydropower Complexes;

c. The rate is sufficient for operating and maintenance expenses, as well as capital
expenditures projected to be necessary within the next 10 years pursuant to a


development plan; provided that interest on loans, bonds and other debts shall not be
included as expenses;

d. The rate allows for systems losses subject to the caps determined by the ERC based on
the load density, sales mix, cost of service, delivery voltage and other technical
considerations it may promulgate;

e. The rate shall include Thirty Centavos (PhP.30) per kWh allocated to the Mindanao
Power Fund as created by this Act and administered by the Corporation.

Section 7. Mindanao Power Fund, ~ A Mindanao Power Fund is hereby constituted which shall
be taken from the rate fixed by the Corporation and from royalties paid by electric power
industry players for energy resources in Mindanao.

The Mindanao Power Fund shall be administered by the Corporation to improve the Mindanao
power situation and to help avert any possible power shortage:

a. By preventing idleness of power plants through

i. Contracting electricity from readily available power plants in Mindanao;
provided, the price shall be the best available price reasonably comparable to
prices offered by similar plants in Luzon and the Visayas;

ii, Operating idle power plants, whether owned by the private sector or by
government, but subject to constitutional and legal requirements;

b. By contracting power plants that can generate electricity within thirty (30) days;
provided, the price shall be the best available price reasonably comparable to prices
offered by similar plants in Luzon and the Visayas,

The Mindanao Power Fund shall be utilized to lower residential rates in such manner as may be
determined by the Corporation and as approved by the ERC; provided it does not sacrifice
energy security in the region,

Section 8. The Mindanao Power Board; Its Composition; Compensation of Members;
Qualifications; Power and Duties. ~ The corporate powers of the Corporation shall be vested in
and exercised by the Board composed of seven (7) members consisting of a chairman, vice
chairman and five directors who shall be appointed by the President of the Philippines. At any
time, there must be one (1) lawyer, one (1) Certified Public Accountant, and one (1) Electrical
Engineer in the Board of the Corporation.

The Directors of the Corporation shall be composed of the following representatives:

Three (3) shall represent the Electric Cooperatives

One (1) shall represent private Distribution Utilities

One (1) shall represent the Mindanao consumer/ratepayers
One (1) shall represent labor, and,

One (1) shall represent the business sector

The General Manager shall be chosen by the majority vote of the Board of Directors and shall be
ex-officio Vice-Chairman of the Board.

The members of the Board shall each serve a term of three years, except that any person
appointed to fill a vacancy shall serve only for the unexpired term of the member whom he
succeeds.


Every member of the Board shall possess any one or a combination of the following
qualifications: A duly licensed professional of recognized competence in engineering, in
business management and finance, or in law, particularly in the field of corporate practice, with
at least ten years actual and distinguished experience in their respective fields of expertise, and of
good moral character. In the case of the labor representative: a recognized labor leader with
sufficient training, particularly in labor-management relations, and of good moral character

All appointees by the President of the Philippines shall be residents of Mindanao.

The members of the said Board shall receive a per diem and allowances for actual meetings
attended or actual work done in such amounts as generally practiced by other government-owned
and controlled corporations,

A majority of the members of the Board shall constitute a quorum for the transaction of the
business of the Board.

Section 9. Powers and Functions of the Board, — The Board shall, moreover, have the
following specific powers and duties

(a) To formulate and adopt policies and measures for the management and operation of
the Corporation; provided that policies and measures, including the compensation
structure of the Corporation, that has any rate impact shall be subject to approval by
the ERC,

(b) To adopt an annual and supplemental budget of receipts and expenditures of the
Corporation according to its requirements, which may include financial assistance 10
municipalities which are the site of or contiguous to watersheds, lakes or natural
sources of hydroelectric power being utilized by the Corporation, subject to the
approval of the Energy Regulatory Commission (ERC): Provided, That copies of the
budgets of receipts and expenditures herein referred to shall be ‘losed to and shall
be subject to audit and verification by the ERC during rate fixin;

(c) Subject to the provisions of existing laws and regulations and upon the
recommendation of the General Manager, to organize, reorganize and determine the
Corporation's staffing pattern and the number of personnel, to fix their salaries and to
define their powers and duties;

(d) To appoint and fix the compensation of the General Manager, subject to the approval
of the President of the Philippines, and to appoint and fix the compensation of the
Assistant General Manager, regional managers, and department chiefs;

(©) For cause, to suspend, or remove, by a majority vote of all members, the General
Manager, with the approval of the President of the Philippines, and the Assistant
General Manager, regional managers and department chiefs, with the approval of the
Office of Economic Coordination; and

(8) To adopt and set down guidelines for the employment of personnel on the basis of
merit, technical competence and moral character.

Section 10. The General Manager; His Powers and Duties; Regional Managers and Other
Officers and Employees of the Corporation. — The management of the Corporation shall be
vested in the General Manager, assisted by an Assistant General Manager, a department chief for
finance, a department chief for engineering and construction, a department chief for
administration, and such additional officers and employees as the said Board may provide. For
this purpose, the General Manager shall have the following powers and duties:

(a) To execute and administer the policies and measures approved by the Board, and
have the responsibility for the efficient discharge of management functions;

(b) To submit for the consideration of the Board such other policies and measures which
he deems necessary to carry out the purposes and provisions of this Act;


(c) To direct and supervise the operation and internal administration of the Corporation
and, for this purpose, may delegate some or any of his administrative responsibilities
and duties to other officers of the Corporation;

(d) Subject to the guidelines and policies set up by the Board, to appoint and fix the
number and compensation of subordinate officials and employees of the Corporation;
and, for cause, to remove, suspend or otherwise discipline, any subordinate employee
with the approval of the Board;

(c) To prepare an annual report on the activities of the Corporation at the close of each
fiscal year and submit a copy thereof to the President of the Philippines, President of
the Senate, and Speaker of the House of Representatives, the Joint Congressional
Power Commission, and to the chairman of the committee concerned in the Senate
and in the House of Representatives: Provided, That the Corporation shall similarly
submit to the respective chairman of the said committees of Congress a report of its
operations and financial statements within fifteen (15) days from the end of every
quarter: And provided, further, That said committees, either motu proprio or upon the
request of any of their members, or of any Member of Congress, as the case may be,
shall have the authority to look into all the matters relative to the financial and
business operations and expenditures of the Corporation;

(f) To exercise such other powers and duties as may be vested in him by the Board from
time to time. In the case of absence or disability of the General Manager, the
Assistant General Manager shall act in his place.

Under the supervision and control of the General Manager, relevant officers of the corporation
shall take charge of the operations of the Corporation as well as prepare its power development
program

Section 11. Authority to Incur Indebtedness and Issue Bonds; Their Conditions, Pri
and Exemptions, Sinking Funds; Guarantee.

lees

(a) Domestic Indebtedness. — Whenever the Board deems it necessary for the
Corporation to incur indebtedness or to issue bonds to carry out the purpose for which
the Corporation has been organized, it shall, by resolution, so declare and state the
purpose for which the proposed debt is to be incurred and the conditions of the bonds
In order that such resolution be valid, it shall be passed by the affirmative vote of at
least four members of the Board and approved by the President of the Philippines
upon recommendation of the Secretary of Finance

‘The bonds shall be issued under the following conditions: (1) they shall be in registered form and
transferable at the Office of the Treasurer of the Philippines; (2) they shall not be sold at less
than par; (3) they shall be payable ten years or more from date of issue as may be determined by
the Secretary of Finance before their issuance but may be redeemable, at the pleasure of the
Board, after five years from such date of issue; (4) they shall bear interest at an annual rate to be
determined before their issuance by the Secretary of Finance; (5) the interest may be payable
quarterly, semi-annually or annually as may be determined by the Secretary of Finance before
the issuance of the bonds; and (6) both principal and interest shall be payable in legal tender of
the Philippines.

The bonds issued under the authority of this subsection shall be exempt from the payment of all
taxes by the Republic of the Philippines, or by any authority, branch, division or political
subdivision thereof which facts shall be stated upon the face of said bonds. Said bonds shall be
receivable as security in any transaction with the Government in which such security is required

A sinking fund shall be created, the total thereof at each annual due date of the bonds shall be
equal to an amount of annuity earning an annual interest of nine-tenths of the rate of interest of


the bonds as fixed by the Secretary of Finance, The sinking fund shall be under the custody of
the Treasurer of the Philippines, who shall invest the same subject to the approval of the Board
and the Secretary of Finance.

‘The Republic of the Philippines hereby guarantees the payment by the Corporation of both the
principal and the interest of the bonds issued by said Corporation by virtue of this Act, and shall
pay such principal and interest in case the Corporation fails to do so, and there are hereby
appropriated, out of the general funds in the National Treasury not otherwise appropriated, the
sums necessary to make the payments guaranteed by this Act: Provided, That the sums so paid
by the Republic of the Philippines shall be refunded by the Corporation: Provided, further, That
the Corporation shall set aside ten per centum of its annual net operating revenues before
interests as a reserve or sinking fund to answer for amounts advanced to it by the National
Government for any loan, credit and indebtedness contracted by the former for which the latter
shall be held answerable as primary obligor or guarantor under the provisions of this Act

Provided, furthermore, That the setting aside of the amounts mentioned herein shall
automatically cease the moment the accumulated sinking fund or reserve exceeds the amounts
advanced to the Corporation by the National Government under this Act: And, provided, finally,
‘That the Corporation may periodically make partial payments to the National Government out of
the said reserves

The total principal indebtedness of the Corporation under this subsection, exclusive of interest,
shall not at any time exceed Ten Billion pesos.

(b) Foreign Loans. — The Corporation is hereby authorized to contract loans, credits,
any convertible foreign currency or capital goods, and indebtedness from time to time
from foreign governments, or any international financial institutions or fund sources
the total outstanding amount of which, exclusive of interests, shall not exceed One
Billion United States dollars or the equivalent thereof in other currencies, on such
terms and conditions as it shall deem appropriate for the accomplishment of its
purposes and to enter into and execute agreements and other documents specifying
such terms and conditions.

The President of the Philippines, by himself, or through the Secretary of Finance or the Governor
of the Central Bank, is hereby authorized to negotiate and contract with foreign governments ot
any international financial institutions, in the name and on behalf of the Corporation, one or
several loans, for the purpose of assisting in the reconstruction, or promoting the development, of
the economy of the country

The President of the Philippines, by himself, or through the Secretary of Finance or the Governor
of the Central Bank, is hereby further authorized to guarantee, absolutely and unconditionally, as
primary obligor and not as surety merely, in the name and on behalf of the Republic of the
Philippines, the payment of the loan or loans herein authorized as well as the performance of all
or any of the obligations undertaken by the Corporation in the territory of the Republic of the
Philippines pursuant to loan agreements entered into with foreign governments or any
international financial institutions.

‘Negotiation and contracting of any loan, credit or indebtedness under this subsection shall be
subject to applicable laws

‘The loans, credits and indebtedness contracted under this subsection and the payment of the
principal, interest and other charges thereon, as well as the importation of machinery, equipment,
materials and supplies by the Corporation, paid from the proceeds of any loan, credit or
indebtedness incurred under this Act, shall also be exempt from all taxes, fees, imposts, other
charges and restrictions, including import restrictions, by the Republic of the Philippines, or any
of its agencies and political subdivisions.


Section 12. Rehabilitation, Expansion, or Construction of the Agus-Pulangui Hydropower
Plant and other Power Projects Recommended by the General Manager. — Upon
determination by the General Manager, on his own initiative or on the recommendation of any
interested party, that the construction of any project by the Corporation is advisable, a report to
the Board, on the engineering and economic feasibility of the project together with preliminary
plans and estimates of the cost of the proposed development and the estimated income to be
derived therefrom shall be submitted by the General Manager.

The Board may thereupon, at its discretion, designate a consulting board composed of two
competent and impartial engineers and one competent economist to pass upon the different
aspects of the project and comment on the report of the General Manager. The Board shall, with
the said report and comment in view, decide whether or not the project shall be constructed, and
what changes, if any, shall be made in the scheme proposed by the General Manager.

Section 13. Construction or Repair Work Awarded upon Public Bidding; Exceptions. - All
work of construction or repair of the Corporation involving an estimated cost of One Million
Pesos or more shall be let by the General Manager, with the approval of the Board, to the
responsible bidder who made the lowest or most advantageous bid. Notice to bidders shall be
published as provided by law. In case no satisfactory bid is received, the General Manager may
proceed to advertise anew, or with the approval of the Board, do the work by administration,
Before award of contract is made, the General Manager shall require the contractor to give an
adequate bond to secure the proper accomplishment of the work under contract and to satisfy all
obligations for materials used and labor employed upon the same: Provided, That any repair,
reconstruction or other work of an emergency nature may be authorized by the Board to be
undertaken by administration or by contract: And, provided, further, That any single work of
construction or repair involving an estimated total cost of less than One Million Pesos may, at
the option of the General Manager, be authorized by him to be undertaken by administration or
by "pacquiao" contract after a canvass of the market to determine the lowest or most
advantageous price

Section 14. Penalty for Destroying, Injuring or Interfering with any Project of the
Corporation, or maliciously Interfering with any Person in the Discharge of his Duties
Connected therewith. — Any person or persons who shall maliciously destroy, injure, or
interfere with any canal, raceway, ditch, lock, pier, inlet, crib, bulkhead, dam, gate, sluice,
reservoir, aqueduct, conduit, pipes, culvert, post, abutment, conductor, cable-wire, insulator,
weir, benchmark, monument, or other works, appliance, machinery, building or property of the
Corporation, or who shall maliciously do any act which shall injuriously affect the quantity or
quality of the water or electrical energy of the Corporation or the supply, transmission,
measurement, or regulation thereof, or who shall maliciously interfere with any person engaged
in the discharge of duties connected therewith, or who shall maliciously prevent, obstruct and
interfere with the survey, works and the construction of access road and transmission lines or any
related works of the Corporation, shall be guilty of felony and punished with a fine ranging from
one to five thousand pesos or with imprisonment ranging from one to five years, or both such
fine and imprisonment, at the discretion of the Court, and any injured party shall have the right to
recover all damages suffered and cost of suit in a separate civil action in any court of competent
jurisdiction.

Section 15. Appropriation of Public Waters. - Subject to existing rights, all unappropriated
public waters which may be used and developed for hydraulic power purposes shall be granted to
the Corporation: Provided, That in case of conflict with the needs for domestic water supply, the
latter shall prevail,

Section 16. Non-profit Character of the Corporation — The Corporation shall be non-profit
and shall devote all its returns from its capital investment, as well as excess revenues from its
operation, for operating, maintaining, expanding and improving the hydropower complexes


and/or its other assets, and as part of the Mindanao Power Crisis Fund. It shall be subject to audit
by the Commission on Audit.

Section 17. Separability Clause. — The provisions of this Act are hereby declared to be
separable, and in the event any one or more of such provisions are held unconstitutional, they
shall not affect the validity of other provisions

Section 18. Repealing Clause. ~ All laws, executive and administrative orders, or parts thereof,
inconsistent with any provision of this Act are hereby repealed or modified accordingly

Section 19, Effective Date. ~ This Act shall take effect fifteen (15) days after its publication in a
newspaper of general circulation

APPROVED, _