ADB-funded e-trike project hits snag due to higher costs

By Richmond S. Mercurio, The Philippine Star

Posted at Aug 16 2014 09:54 AM | Updated as of Aug 16 2014 05:54 PM

MANILA, Philippines - The Department of Energy’s electric-tricycle (e-trike) program has hit another bump in the road towards initial rollout, further delaying the Asian Development Bank-funded $504-million project.

In an interview, Energy Secretary Carlos Jericho Petilla told The STAR that the government will likely rebid the supply contracts of the first 3,000 e-trike units this year following issues raised against potential suppliers and the lack of off-takers.

Petilla said majority of the interested local government units (LGUs) which are the potential beneficiaries of the project have backed out upon learning that suppliers have increased the cost of the e-trike units.

Based on initial talks between the suppliers and its off-takers, a DOE source explained that manufacturers offered each e-trike unit at only P200,000. But during recent negotiations, the source said qualified suppliers have raised indicative prices per e-trike unit to about P305,000.

Still, the source said the price the suppliers are offering the LGU beneficiaries is still cheaper than the commercially available e-trikes which cost at least P400,000 a unit.

“Most likely we will rebid the supply contracts because the prices have gone up dramatically resulting to plenty of negotiations becoming problematic,” Petilla said.

The recent problem on the hike of e-trike prices being offered by manufacturers came on top of the DOE’s recent decision to put on hold the awarding of the supply and delivery contracts of the first 3,000 units due to lack of qualified off-takers

“Most of the LGUs did not qualify, especially when it comes to the seal of good housekeeping. Financially they are okay, they have the money and they can be trusted with the loan. They just don’t have good housekeeping,” Petilla said.

The DOE earlier tried to negotiate with the Department of Finance (DOF) to relax the stringent loan requirements of Landbank on the LGUs. The DOF was the agency that laid out the loan requirements.

Petilla, however, said their request came to no avail and as such, the DOE will not consider anymore LGUs with no seal of good housekeeping as beneficiaries once the the supply contracts are finalized.

The energy chief said they are targeting to rebid the supply contracts this year, with the rollout of the first 3,000 units seen by next year.

Under the program, the DOE was supposed to roll out the first batch or 3,000 e-trike units this year.

An auction was held in August last year with manufacturers from Korea, Japan and Taiwan.

The awarding of the contract to the winning e-trike manufacturer which would have paved the way for the initial rollout was initially set in December last year but was delayed following reviews made by the ADB.

The ADB’s clearance eventually came in the first quarter, with the bank issuing its “No Objection Letter” on the auction.

The $504-million e-trike project is a joint undertaking of the DOE and the ADB. The program is funded through a $300-million loan from the ADB, $105-million loan and grant from the Clean Technology Fund, and Philippine government’s $99-million counterpart funding.

The project seeks to reduce the country’s fuel imports and lessen annual carbon dioxide emissions by replacing 100,000 of the 3.5 million gasoline-powered tricycles currently operating in the Philippines with the e-trikes.

According to the DOE, the program aims to rollout as many as 100,000 e-trikes in a five-year period, with the initial 3,000 units for rollout during the first year.

With the delay in the program’s implementation, the DOE said it will try to catch-up next year with the project’s timetable.

The e-trikes run on an electric motor and rechargeable lithium-ion battery. It will be introduced in Metro Manila and other urban centers across the Philippines under a lease-to-own arrangement in which drivers will be required to pay a daily boundary to their respective LGUs.