Lawmakers shocked water firm bags oil-spill cleanup contract

Lawmakers on the House committee on energy were shocked when they learned on Monday that the company that bagged the multimillion-peso contract to clean up the oil spill off a fishing town in Iloilo was an operator of neighborhood purified water refilling stations a little over a year ago.

Karl Ignatius Young, president of Kuan Yu Global Technologies Inc., admitted during Monday’s hearing that his company, which was awarded the P87-million contract to clean up the oil spill off Estancia town in Iloilo that came from a power barge owned by Power Sector Assets and Liabilities Management Corp. (PSALM), was originally known as Maxx Ionized Alkaline Water Inc., a franchiser of purified water refilling stations until May last year when it amended its incorporation papers.

“There are serious questions surrounding the awarding by PSALM of the P87-million cleanup contract to a company that previously sold bottled water as its main concern and had no track record whatsoever in cleaning up oil spills,” ACT Teachers Rep. Antonio Tinio said in a text message.

“Why have the health, safety, and livelihood of thousands of affected residents of Estancia been placed in the hands of a contractor with dubious qualifications?” Tinio asked amid  mounting complaints from local government officials that KY Global did not have the resources to undertake the massive cleanup of the oil spill from the National Power Corp.-operated Power Barge 103, which crashed into Estancia’s rocky shoreline at the height of Supertyphoon “Yolanda” on Nov. 8.

Cleanup experience

During the hearing, Young claimed that he was competent to handle the job, as he had experience from the cleanup of the Semirara oil spill in December 2005 as well as the Guimaras slick in August 2006.

In a statement, Young claimed that he “trained extensively as far as Norway in oil spill prevention, management and contingency responses, and previously served as chief of the Philippine Coast Guard’s Central and Eastern Visayas Marine Environmental Protection Unit.”

But Oriental Mindoro Rep. Reynaldo Umali, committee chair, said Young’s expertise in cleanup operations did not automatically translate into KY Global’s gaining such status.

“The person and the corporation are different,” Umali said.

No track record

Tinio also questioned PSALM for awarding an P87-million contract to a company with no track record and equipment.

“It has come to this—a company with a P62,000 paid-up capital can win a multimillion-peso contract. That is just the price of a Mac book,” Tinio said.

Young said an oil spill cleaner did not need to own equipment used in siphoning off oil from the sea because it could lease these from other companies.

PSALM president Emmanuel Ledesma Jr. stood firm on the state-owned company’s decision to award the contract to KY Global. Ledesma said PSALM checked KY Global’s record and found it included oil spill cleanup.

The lawmakers asked Ledesma why PSALM chose KY Global over the other bidder, Harbor Star, which had P424 million in paid-up capital and P1.5 billion in authorized capital.

Harbor Star’s offer of P96.4 million was rejected on a technicality—it failed to state whether its offer was inclusive of taxes—which prompted a second bidding that KY Global won, Ledesma said.

Graft case

Ledesma was reluctant, however, to discuss the other concerns raised by the committee members, specifically the bidding process and KY Global’s lack of resources and track record, preferring to explain in writing.

Ledesma told the lawmakers that he could not answer their questions because of a pending graft case filed by former Rep. Augusto Syjuco Jr. in the Ombudsman alleging that PSALM favored KY Global because of the intervention of Senate President Franklin Drilon.

Ledesma issued a statement denying Drilon’s alleged intervention in the bidding.

He stressed that PSALM was not “sidestepping” the issues by not answering some of the questions raised by the lawmakers.

Ledesma said he was merely being prudent considering that PSALM’s reply could be part of its defense in the Ombudsman case.

But lawmakers were quick to dismiss Ledesma’s using the Ombudsman case as an excuse, noting that no pending court case could prevent him from testifying in the congressional hearing.

Umali was disappointed with PSALM’s stonewalling. “The response of PSALM is wanting because it merely defends its position based on the process but not the resulting damage it caused the Ilonggos. We hope to cover this when we resume hearing next year, after the break,” Umali said.

Long suffering

Iloilo Rep. Niel Tupas Jr. took the cudgels for his townmates who he said suffered longer than necessary due to the delayed and slow cleanup operations.

“Since Nov. 8 when Yolanda hit northern Iloilo, the government agencies such as PSALM, Napocor and Coast Guard were very slow and inefficient in reacting to an emergency situation that endangered the lives of the residents affected. Since the cleanup started last Nov. 23, the private contractor has not met the important timelines,” Tupas said.

Tupas said there was a slight improvement in the pace of the cleanup but only after the Dec. 9 meeting of the various agencies where the local government and residents aired their concerns.

“Those responsible for the inefficient response to an emergency should be accountable hence the investigation by the commission on energy is in order,” Tupas said.

“Around 500 families or around 2,000 residents are now suffering in the evacuation site in Estancia because of the inefficient response of the agencies to an emergency situation. These families should be compensated,” he said.

According to Tupas, PSALM officials gave “vague and conflicting” information on the extent of their insurance coverage and how much the company was willing to cover for the impact of the oil spill.

In a statement, KY Global claimed that it had successfully extracted 175,782 liters of clean bunker oil from the barge’s two tanks and 426,200 liters of contaminated bunker oil and transferred to another barge, the MT Obama.

Claims debunked

But a resident of Estancia testified in the hearing to debunk PSALM’s claims that the cleanup was on target.

Hope Hervilla of “Task Force Buliganay Estancia” told the committee: “The cleanup of Estancia is slow-paced and it has aggravated the devastation caused by Yolanda. Until now, the oil spill on the shorelines and in the water continues to wreak havoc on the residents and the marine environment. We are not so sure if they already siphoned off all the remaining bunker fuel because they are not transparent with the people.”

Estancia has a population of 47,000.

Hervilla claimed that KY Global has only collected 80,000 liters out of the 800,000 to 900,000 liters of oil that leaked from the barge.

She said PSALM took advantage of the desperation of the residents and made them sign legal papers to limit its liabilities.

Tinio also doubted PSALM’s cleanup reports, noting that the company was not even sure how much oil had leaked from the barge, as estimates ranged from 300,000 to 800,000 liters.

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