Mindoro Geothermal Power Corp. (MGPC), a subsidiary of Emerging Power Inc. (EPI), said on Wednesday the service contract for its Montelago Geothermal Power Project has been revoked by the Department of Energy (DOE).
The DOE letter of final and irrevocable termination of Geothermal Renewable Energy Service Contract No. 2010-02-013 between MGPC and the DOE covering the geothermal project also stated that the company must pay $120,000 within 30 days from date of receipt.
The DOE, according to MGPC, cited failure to comply with the required milestones as stipulated in approved five-year work program of the project. MGPC said it will settle the financial obligation within the period required by the DOE.
‘The company has fully provided for the impairment of its investment in EPI in relation to EPI’s investment in MGPC. The termination of the service contract and the payment by MGPC of the financial obligation will not have a material impact on the company’s financial situation,’ it said.
The geothermal project was supposed to provide 40 megawatts (MW) to stabilize power and electricity costs in Mindoro. The project was plagued by delays due to, among others, withdrawal of endorsement by a local government.
EPI is a subsidiary of Nickel Asia Corp.