Electric co-ops still reeling from debt

8:09 pm | Monday, September 17th, 2012

Energy Secretary Jose Rene D. Almendras: Politicians are to blame. INQUIRER FILE PHOTO

MANILA, Philippines—Electric cooperatives continue to reel from obligations to power-generation companies—now standing at P13.48 billion as of end-June this year—even after the government condoned P18 billion of their unpaid debt back in 2004.

Power utilities in Mindanao accounted for bulk of the total debt, owing power generators a total of P8.8 billion. Lanao del Sur Electric Cooperative (Lasureco) has a total of P3.3 billion in obligations, the biggest among electric cooperatives.

Energy Secretary Jose Rene D. Almendras said that because electric cooperatives are highly politicized in nature, mismanagement and financial problems usually take place.

According to Almendras, there are politicians who protect the board directors of electric cooperatives that do not remit payments to power-generation firms on time or who give donations or bonuses that should not have been given out in the first place.

At times, some of the electric cooperatives are being used to sway votes of consumers within a franchise area.

This matter is highly critical because it not only threatens the viability of electric cooperatives, to the detriment of the consumers concerned, but more importantly, the ballooning obligations hamper the potential investments in the power-generation sector, Almendras stressed.

He explained that there is a certain reluctance on the part of banks and other financial institutions to fund power projects of electric cooperatives that are delinquent in their payments to power-generating firms.

“We need new generation. No one will lend if the project does not have offtake arrangements that are acceptable to financial institutions. Even if the electric co-ops are willing to sign contracts, these contracts are not acceptable to the financial institutions if the electric co-ops are [financially] unhealthy,” Almendras said.

The solution being eyed now is to amend the charter of the National Electrification Administration which, according to Almendras, was merely a lending institution before.

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Tags: Debt , electric cooperatives , electricity production and distribution , Energy

Butzz

Why should a regulated monopoly fail? Here are several answers: 1. Electric coop management overspending and financial mismanagement (even Sec. Almendras admits it); 2. NEA negligence (just look at DOE circular 0f 2003-12-011); 3. ERC regulatory failure. Add all these to Amyat’s observation of an Aboitiz (do not forget the Lopez) influence, everything is being prepared for an eventual private take-over.
Butzz

You are right, Amyat. I just would like to add that with these developments, it is about time we abolish NEA. It is not true that we should be beholden to this agency for all these years while taking care of Electric Coops, they have become its proverbial ‘baby-sitters’ who eventually became ‘leeches’ sucking the very blood of coops through their control which was intended to be relinquished to its member-consumers. Management of coops itself has become NEA extensions of this control.
amyat

Pres. Marcos signed into law RA 6038 on August 4,1969 which created the National Electrification Administration (NEA) and gave electric cooperatives (ECs) the task of providing adequate, reliable and low cost electricity. Then on August 6, 1973 NEA was further strengthen and make more flexible by PD 269 by converting it into a corporation, fully owned and controlled by the government, possessed with borrowing authority and corporate power. Then PD 1645 amended PD 269 and it says; NEA Board of Administration may take preventive and/or disciplinary measures including suspension and/or removal and replacement of any or all of the members of the BOD, officers or employees of the electric cooperatives (Section 5). Furthermore, the management of the ECs shall be vested in its BOD subject to the supervision and control of NEA which shall have the right to be represented and to participate in all BOD meetings and deliberations and to approve all policies and resolutions (Section 7). Now Sec. Rene Almendras is saying that NEA was merely a lending institution to electric cooperatives? He is committing a blatant misinformation in order to put the electric cooperatives in bad light so that his patron the Aboitiz and company can take over the electric cooperatives for a song or under its thumb if it will remain with NEA instead of being registered with CDA. Being a former Treasurer of Aboitiz is a good reason for him to be loyal to corporate set up than for electric cooperative to become a (genuine) stock cooperative owned by the very people it serves who are the masses. NEA has mismanaged the ECs but no ECs has been bankrupt because by the nature of its business it is naturally unsinkable. By its very nature ECs will be in the better hands of the people if it will be owned and managed by the people themselves as a stock cooperative registered with CDA.

Electric co-ops still reeling from debt

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