BUSINESS MIRROR
MONDAY, 19 SEPTEMBER 2011 02:38
THE National Electrification Administration’s (NEA) Board of Administrators on Friday has approved the adoption of options for cash-strapped electric cooperatives (ECs) to help them recover and ensure continuous delivery of electric service in their coverage area.
“The options for ailing ECs, as approved by the NEA Board of Administrators on May 20, 2011, is one concrete step of NEA which shows our continuous effort to think of ways in helping the electric cooperatives.
We are optimistic that with a definite action plan in place, we will be able to immediately enforce the applicable option and measures to assist an EC,” Edita Bueno, NEA administrator, said.
Ailing ECs are those that have no means of meeting their outstanding obligations due to financial, technical and/or institutional inefficiency, according to NEA.
NEA said parameters to be used in determining whether an EC is ailing include the high system loss, low collection efficiency, current ratio, operating loss, huge liabilities, negative net worth and institutional problems such as governance, consumer per employee ratio and adherence to policies.
NEA added that the ailing ECs will be categorized into curable and incurable. Curable ailing ECs are those that have a chance to turnaround based on financial, technical and institutional efficiency, while incurable ailing ECs are those whose recovery is impossible.
NEA said a simulation of the parameters will be made on all ECs and that all affected ECs will be informed they are part of the group considered as ailing ECs.
NEA said the ailing ECs will be provided with a period of 30 to 90 days to submit a Recovery Plan, including a Performance Commitment Contract for approval of NEA.
NEA said a periodic assessment will be made to validate the performance of the ECs, and an EC that continues to deteriorate in performance during the prescribed 180-day period will be a candidate for immediate application of the options for incurable ECs.
NEA said the options for incurable ECs include extra-judicial foreclosure (Section 5 of PD 1645 in relation to Section 35-37 of PD 269), private sector participation that can be a joint venture, investment management contract, management contract, operations and maintenance contract, special equipment and materials lease agreement or concession and insolvency (voluntary/involuntary). Another option would be the possibility of turnover of EC to local government unit.
NEA said if operations improvement is evident, the EC will be given another 90 to 180 days to fully recover through a new performance commitment contract/work program. --P. Isla
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