Albay Gov: Power coop inefficiency due to meager operational expenses

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By Floreño G. Solmirano

LEGAZPI CITY, 25Aug2013 – Only P 5 million of the P 2.4-billion expenses incurred by the Albay Electric Cooperative (Aleco) from 1995 to 2012 went to operational expenditures.

This is the reason it could not operate efficiently — leading to brownouts and aggravating revenue losses, according to Albay Gov. Joey S. Salceda.

Presenting an analysis of Aleco’s financial condition, Salceda added capital expenditure swallowed only P 26 million annually of the total expenses and this was mainly for maintenance like acquisition of posts and transformers.

These meager amounts allotted to capital expenditures led to Aleco’s failure to modernize its old, highly depreciated equipment.

Of the total P 2.4-billion expenses, P 2.1 billion went to payments to the Aboitiz Power and Renewable Energy Corp. and the Wholesale Electricity Spot Market.

The rest was gobbled up by depreciation and interest expense that were largely accrued, hence, non-cash, Salceda noted.

Aleco employees had their share of expenses in terms of salaries that totaled P 10 million per month or an aggregate amount of P 185 million during the past 17 years.

Largely due to continuous losses during this period, Aleco’s debt has mounted to P 3.7 billion.

Aleco is indebted to Philippine Electricity Market Corp., P 1.4 billion; Power Sector Assets and Liabilities Management Corp., P 2.0 billion; Transmission Corp. of the Philippines, P 104.6 million; National Grid Corp. of the Philippines, P 55.8 million; and National Electrification Administration, P 200.6.

Of the P 3.7 billion total liabilities, P 2.6 billion is for principal; P 484.5 million, interest and surcharges; and P 576.3 million, value-added tax.

Salceda said Aleco’s losses started way back 1995, when the “systems loss cap law” went into effect.

Republic Act No. 7832, signed on Dec 8, 1994, penalizes the pilferage of electricity and theft of electric power transmission lines/materials, rationalizes system losses by phasing out pilferage losses as a component thereof, and for other purposes.

Based on the Department of Energy, Aleco’s financial losses due to system losses (or power bought but not billed/sold) amounted to P 1.9 billion from 1995 to 2012.In 2012 alone, the system loss amounted to P 240 million.

Also based on DOE estimate, financial losses due to collection inefficiency amounted to P 2.4 billion during the same period and in 2012 alone, this amounted to P478 million.

Employee inefficiency contributed P 424 million.

Salceda said DOE Secretary Jericho believes there is no political corruption in Aleco and that he thinks the problem is largely structural and organizational — its inability to bill, collect and modernize. (PNA)

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