Bid failure stalls Albay power coop to private control

Photo Courtesy: Arkibong Bayan
Photo Courtesy: Arkibong Bayan


LEGAZPI CITY (13-Sept-2013/PNA) – The Albay Electric Cooperative (ALECO) is still facing a depressing prospect to revive the ailing electric cooperative after attempts to privatize the local coop failed, an Aleco official said.

Albay Bishop Joel Baylon, Aleco’s Interim Board of Director (IBOD) chairperson said Aleco failed twice to adopt the National Electrification Administration (NEA) proposal for ALECO to pursue a Private Sector Participation (PSP) as a management option to bail out the cooperative with its financial and operational woes.

Baylon, at a media forum said, Aleco attempted twice to undertake a negotiated bidding for a consultancy service to prepare the cooperatives Terms of Reference for the PSP initiative, first bidding was in June 25, this year, then it was followed in July 20.

The two bidding failed because only three consultants participated and the amount of consultancy services they sought was way above the P2 million ceiling the cooperative had required.

Baylon, determined to carry out the PSP initiative said the Board decided to increase the consultancy service bidding by P4 million.

He hopes that the IBOD could be able to employ a consultancy service by February next year.

The winning bidder would pass through a technical working group formed to evaluate the bids for submission to IBOD for approval, he said.

The consultant is task to prepare the Terms of Reference (TOR) for the private sector participation in rehabilitating Aleco either through concession agreement or joint venture participation, Baylon said.

The NEA, during the Aleco stakeholder forum last year, said the government could no longer bailout the ailing electric cooperative in providing electricity to some 250,000 consumers across the province.

Edgardo Piamonte National Electrification Administration (NEA) deputy administrator said that the best option to revive the ailing Albay Electric Cooperative (ALECO) is for it to be privatized.

He said the government could no longer save the cooperative since it has no more funds to assist financially-ill electric cooperative.

He proposed the involvement of private sector participation in its operation to improve electric service reliability and dependability.

The private sectors participation would also improved its financial standing and assist in meeting its obligations with the Philippine Electricity Market Corporation and other private power suppliers.

ALECO insiders said the Aboitiz, Lopez EDC and Manny V.Pangilinan and other IPPs are interested to buy out ALECO.

Baylon said the IBOD have introduced reforms aimed to ensure transparency and accountability of every officer and employees in the cooperative.

The reforms include the correction and replacements of defective meter in households, regular reshuffling of meter readers, strict implementation of “one bill policy,” payment of power bills only in collection offices, apprehension of illegal connections.

He, however, said despite the reforms it instituted the cooperative still cannot sustain its operation because the firm is currently saddled by the very high system losses it incurred and slow collection efficiency.

ALECO’s current system loss is at 25.17 percent way above the 13 percent allowable cap by the Energy Regulatory Commission (ERC) guidelines.

ALECO subsidizes the system loss above cap which amount to P14.16 million a month.

The cooperatives collection efficiency is only 85 percent of sales but this is insufficient to cover the monthly operation as result of the high system loss.

The high system loss is attributed to the antiquated, defective power transformers, power meters in various sub stations and power lines while the substations are not compliant to the Grid Code.

To solve the problems of system loss it needs huge funding requirements to improve electrical distribution, system reliability and reduction of the system loss.

ALECO is operating at a loss as the cooperatives financial status as of September this year indicate that it owes power suppliers close to P3.4 billion in liabilities.

To lower the liabilities and to avoid disconnection of power supply the cooperative implemented a Special Payment Arrangement scheme among consumers.

Baylon laments that the SPA scheme failed to get support from the 250,000 consumers as only 58 percent of them complied with the SPA payment for the period from Sept. last year to June this year, collecting only P196 million.

At the rate the SPA collection is going, the 58 percent participation would slide down to 20 percent by the end of the year, Baylon claims.

ALECO one of the problematic electric cooperative in the country is presently under the NEA this agency has entered to an agreement with the cooperative to assist the ALECO in their financial and technical operation.

ALECO still owes the Power Sector Assets and Liabilities Management Corporation (PSALM) P1.8 billion in outstanding debts, PEMC– P974 million and NEA with P192 million, NGCP P142 million.

The cooperative’s current power bills amounted to P269.1 million and it owes its material suppliers, contractors and retirement benefits by P12.2 million.

ALECO has entered into a bilateral power contracts with Independent Power Producers (IPP) for supplying 70 percent of the 300 million kilowatt hour yearly electricity requirements while the Wholesale Electricity Spot Market provides 30 percent of that requirement. (PNA)


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