Huge debts threaten closure of Abra power co-op

by Orly Guirao - February 8, 2016

http://www.businessmirror.com.ph/huge-debts-threaten-closure-of-abra-power-co-op/

BANGUED, Abra—Huge debts that have ballooned to P600 million, from P300 million three years ago, now threaten the normal operation of the Abra Electric Cooperative (Abreco) which has suffered at least three incidents of power-supply cutoff in the past three years.

This fragile situation of Abreco was revealed in documents sourced from the National Electrification Administration (NEA), the National Grid Corp. of the Philippines and other government agencies mandated by law to supervise and monitor the operations of electric cooperatives.

Based on the NEA report, Abreco suffered power shutdowns in 2012, 2013 and 2014 due to accumulated unpaid bills for consumed electricity.

In 2014 Aboitiz Power Corp. cut off its supply to Abreco after the cooperative failed to pay P50 million in arrears and terminated the power co-op’s long-term supply contract.

Stripped of its long-term contract, the power co-op has resorted to buying electricity from the spot market at a much higher rate than on long-term contracted power with a single supplier.

Secured documents showed that the power co-op started bleeding way back in 2005 under the stewardship of Abreco’s General Manager Marco Bautista, now mayor of San Juan, Abra, when it recorded monthly losses averaging P250,000.  It continued losing money up to the co-op’s latest financial report submitted to the NEA in June last year, which showed it was short of cash on hand amounting to P1 million.

The late provincial board member James Bersamin was only starting to make public the huge debts in October 2005 when he was gunned down in front of the capitol. His cousin, Rep. Chito Bersamin, was also murdered in front of a Quezon City church two months later.

The bulk of the multimillion debts were owed to the Power Sector Assets and Liabilities Management Corp. (PSALM) which inherited it from the National Power Corp. (Napocor) by force of the Energy and Power Industry Reform Act. (Epira).

Starting at over P114 million in 2006, the debt to PSALM grew to P355 million by 2014 and about P500 million last year, records of the government corporation and tips made by officials who refused to be named.

The PSALM debt represented unpaid power bills  to Napocor incurred under Bautista’s stewardship in the early to mid 2000s.

The cooperative had incurred arrears in electric bill of P50 million to the AboitizPower when the latter terminated its long-term supply contract at the close of 2014. Aboitiz disconnected the whole power from the national grid three times before the contract termination.

Bautista had also borrowed P25 million from the NEA in 2003. This has ballooned to P35 million as of this week after the co-op stopped paying its amortization including interests and surcharges since 2007 when it defected from th e NEA to the Cooperative Development Authority.

It resumed payments to the NEA only last year after  it sought to return to the fold of the NEA. Its last payment of P1 million was made last October.

“They bolted from the NEA most likely because the management did not want us to take over the co-op,”said Adelina Gabon, head of NEA’s Finance Department. “Under the law, however, we still have authority over the co-op.”

Abreco applied for a new loan from the NEA to help stop the bleeding, but Gabon said this could not be granted until the old loan is fully paid for. Besides its debts to PSALM, NEA and Aboitiz, the co-op had unpaid taxes of P12 million to the Bureau of Internal Revenue.

As a result, Abra consumers now buy an average power rate of P12 per kilowatt-hour, higher than Manila Electric Co. rates and one of the highest in the world, a co-op official said.