Aleco rehab cost seen to hit P1B | Inquirer Business

Aleco rehab cost seen to hit P1B

/ 09:33 PM October 01, 2013

Diversifying conglomerate San Miguel Corp. may need to spend a substantial amount to fix debt-ridden Albay Electric Cooperative (Aleco) in what may become a test case for an emerging movement to reform electric cooperatives (ECs).

“San Miguel may have to invest P1 billion to rehabilitate (Aleco),” Albay Governor Joey S. Salceda said at the Philippine Independent Power Producers Association industry seminar. The amount, he said, could fund improvements to curb systems losses.


Salceda said Aleco’s problems stemmed from a combination of failures to bill and collect from customers, as well as systems losses due to old equipment and facilities.

Aleco ranks sixth among power distributors nationwide in terms of sales, but is also among those with the largest debt.


To date, Aleco’s systems losses stood at 24 percent, which is much higher than the 13-percent cap set by regulators. Efficiency, however, stands only at 76 percent, or below the 95 percent national average for ECs.

Given the prevailing situation, privatizing management was a good development for Aleco, Salceda said.

The power cooperative’s debts have reached nearly P4 billion, mostly owed to state-administered Power Sector Assets and Liabilities Management Corp. and the Philippine Electricity Market Corp., which operates the Wholesale Electricity Spot Market.

A modernized Aleco may feed San Miguel some P600 million a year in revenues from operations, Salceda said. When this happens, Aleco’s case may become a template for other ECs, he said.

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TAGS: Aleco, Business, electric cooperative, San Miguel Corp.
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