Written by Rhaydz B. Barcia Correspondent Published on 16 April 2013
LEGAZPI CITY: Anytime the management of Albay Electric Cooperative, Inc., (Aleco) will be turned over to a private entity to run the ailing Albay power cooperative saddled with P3.7-billion debts.
The Aleco interim board of directors led by Bishop Joel “Bong” Baylon of the diocese of Legazpi gave up overseeing the cooperative despite instituting reforms, improving collection efficiency and lowering unnecessary and unavoidable systems losses acquired in the operation.
Aboitiz is one of the prospective companies that may take over but the prelate told The Manila Times that they will select the winning bidder to run Aleco for 25 years anytime this month or as soon as the rightful entity wins the bidding.
Baylon said that there is a need to totally overhaul all antiquated sub-stations, defective meters, transformer and equipment.
The government poured in billions of pesos to rehabilitate Aleco but the funds were reportedly lost to graft and corruption under the previous management.
“Private sector participation could help up to resolve the problem in Aleco. Equipment and meters are all defective with high systems losses running from P27-P37 million a month,” Bishop Baylon said.
Asked if the management will be totally privatized, the prelate said that the cooperative will still be owned by consumers.
“Aleco remains under the ownership of the consumer. This private sector partnership (PSP) will not lead to privatization of cooperative ownership,” he said.
The partnership according to Bishop Baylon means that Aleco shall enter into a contract with a private company that will operate the cooperative for the next 25 years and possibly renewable for another term or until such time that the co-op shall have been able to pay its debts, recover losses and be able to provide once again the necessary services it is supposed to give its member-consumers but not beyond 50 years.
During this period, Aleco shall retain its cooperative character and its franchise, assets and fixtures will remain the property of the electric cooperative.
“PSP is not privatization because ownership of the cooperative remains with member-consumers. The concessionaire will pay a concession fee and a profit sharing scheme has been established so that when the Aleco operation results in a net margin there is also a profit sharing between the concessionaire and the cooperative,” the prelate said.
The contract stipulates that the concessionaire shall pay off or make representation to the creditors to settle the entire P4 billion debt of Aleco within five years. It also requires the upcoming new management to inject an initial amount of no less than P250 million in the next three years as capital expenditure to rehabilitate the distribution system of the electric cooperative for better and more stable electric service.
Total arrearages of Aleco reached P3.7 billion as of December 2012, Vicky Briones, Aleco project supervisor told The Manila Times.
Aleco owes the Power Sector Assets and Liabilities Management Corporation (Psalm) some P1.9 billion in outstanding bill, PEMC P962 million for transmission charges, NGCP P133 million and P219 million for NIA aside from P974 million for Wholesale Electricity Spot Market (WESM).
WESM is currently providing 60 percent of the 300 million kilowatt hour yearly electricity requirement of the Aleco with some 250,000 electricity consumers in the 15 towns and three cities of the province; 40 percent of the power supply requirement is being provided by Aboitiz, an independent power producer (IPP) operating the Tiwi Geothermal plant in Albay. source
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