NEA authorizes power co-ops to apply for loans

March 31, 2020 | 9:17 pm
https://www.bworldonline.com/nea-authorizes-power-co-ops-to-apply-for-loans/

RURAL power cooperatives in rural areas have been given the green light to apply for short-term loans from financial institutions to cushion the impact of falling power demand during the enhanced community quarantine (ECQ).

The National Electrification Administration (NEA) said Tuesday it allowed 121 electric cooperatives (ECs) to borrow money from financial institutions to shore up working capital during the downturn in power usage.

“We take cognizance of the EC’s mandate to operate to ensure continued service delivery to the member-consumer-owners during the state of calamity. However, the financial condition of the ECs might be adversely affected due to the COVID-19 situation,” NEA Administrator Edgardo R. Masongsong said in a statement.

The Department of Energy (DoE) nsaid power demand fell by around 30% during the Luzon-wide lockdown and the implementation of a state of calamity due to the coronavirus disease 2019 outbreak.

The agency tasked to oversee the industry said electric cooperatives must obtain loans that are “fair and equitable.”

It said that the loans must have a repayment period not exceeding three years, “reasonable” interest rates which are the lowest possible. The loan amount must not exceed three times their average billings.

“No encumbrance of real properties, or a substantial portion of other properties or assets, will be made by the ECs,” Mr. Masongsong said.

The NEA has reported that over 80 ECs have been granted an extension of bill payments of up to 30 days from the end of the quarantine period on April 14, following an order from the DoE.

The department said some power stakeholders have expressed their intention to suspend operations as electricity demand drops.

“A decline in power demand does not mean that operations could and should be put to rest,” DoE Alfonsi G. Cusi said in a statement Thursday. — Adam J. Ang