DOE targets 10 ailing electric coops under ‘receivership’ status

Published January 25, 2017, 10:01 PM By Myrna M. Velasco

http://business.mb.com.ph/2017/01/25/doe-targets-10-ailing-electric-coops-under-receivership-status/

At least 10 electric cooperatives (ECs) labeled to be of “ailing status” are being targeted by the Department of Energy (DOE) to be placed under “receivership status” so they can be infused with much-needed financial succor and systems of efficiencies in their management.

One of these electric cooperatives, according to Energy Secretary Alfonso G. Cusi, is on extreme financial hemorrhage with estimated R10 billion worth of indebtedness – the Lanao del Sur Electric Cooperative (LASURECO) in Mindanao.

The nine others are: Abra Electric Cooperative (ABRECO), Pampanga Electric Cooperative III (PELCO 3); Camarines Sur Electric Cooperative III (CASURECO 3); Albay Electric Cooperative (ALECO); Masbate Electric Cooperative (MASELCO); Ticao Island Electric Cooperative, Inc. (TISELCO); Basilan Electric Cooperative, Inc. (BASELCO); Tawi-tawi Electric Cooperative, Inc. (TAWELCO); and Sulu Electric Cooperative, Inc.

ALECO was earlier privatized with San Miguel Energy Corporation giving it much-needed shot in the arm – both financially and technically. But there are still problems hobbling this power utility’s operations until now.

A “receivership arrangement” may be enforced by the government when a certain power utility or EC is validated or audited to be of decrepit state or financially crippled condition.

Cusi said the government draws its ‘step-in rights’ into these electric cooperatives under Republic Act 10531 or the revised Charter of the National Electrification Administration (NEA), an agency under the energy department.

The law prescribes that NEA could take several options under its “step-in” power which is akin to a “receivership process” set by a governing entity – and these could take the form of “take over” of the ECs; or private sector participation (PSP) option through competitive bidding after the terms of reference (on case-to-case basis) had been established.

The energy chief indicated that these ailing ECs reached such a feeble state because they are being mismanaged by what he calls “ninja operators” or a set-up to be of highly politicized nature.

“We are addressing that issue – we’re looking at options and studying them.  We can turn them into voting stocks or corporatize them with the step-in rights accorded to NEA with the imprimatur of the DOE,” Cusi noted.

He qualified that for “these ailing ECs, we can place them under receivership, then we prepare them into a transition toward the entry of private sector takers…that’s part of the option we’re looking at, to inject capital into them.”

The energy secretary said the identified poorly managed ECs have been undergoing audit that will also be followed by a revalidation process by the NEA. From that phase, the government will assess if a receivership option shall be pursued.