By Myrna Velasco
September 15, 2013
The hanging privatization fate of debt-laden Albay Electric Cooperative (ALECO) will finally be sealed depending on the outcome of the referendum held over the weekend.
As of press time, Energy Secretary Carlos Jericho Petilla noted that the Court of Appeals had not issued temporary restraining order (TRO) that should have stopped the process.
On Friday, the energy chief as well as ALECO and the National Electrification Administration (NEA) were all fidgety at probabilities that the referendum might not happen because of a TRO petition filed by a certain Atty. Oliver Olaybal, former ALECO director from Guinobatan, Albay.
Petilla explained that the referendum will attest to the “willingness” or “reluctance” of the Albay consumers as to the proposed privatization through award to San Miguel Corporation (SMC) of their financially-ailing electric cooperative.
SMC, in its previous disclosure to the Philippine Stock Exchange (PSE), noted that it already received correspondence from ALECO as to the prospective award of the power utility to it.
The diversified conglomerate was the sole bidder in the auction process that was undertaken for the sale of the electric cooperative.
The privatization terms call for SMC’s absorption of P4 billion worth of debts, and while silent in the auction provisions, this comes with a no guarantee for cost recoveries in ALCEO’s pass-on rates to customers.
The acquiring company will also need to inject fresh capital of more than P500 million for the electric cooperative’s rehabilitation as well as separation benefits for employees and other expenses.
While it holds substantial stake in Manila Electric Company (Meralco), the ALECO buy-in will be SMC’s first real operation and management foray into the distribution segment of the power industry.
SMC is also the country’s leading power generation company in terms of plant ownerships and control on dispatch of capacities; and its plunge into full throttle power distribution service will somehow bring it into other domains of addressing electricity consumers’ needs. source
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