Private-sector-participation scheme of management wins in Aleco referendum

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LEGAZPI CITY, 15Sept2013 (PNA) – With total votes of 5,506, the private- sector-participation (PSP) option won over the coop-to-coop (C2C) scheme, which garnered 3,491 votes, in Saturday’s referendum among member-consumers of the debt-ridden Albay Electric Cooperative (Aleco).

Some 100,000 Aleco consumers were expected to show up at the 23 voting precincts in public elementary and high schools put up by the referendum coordinators, said Alvie Boral, Aleco spokesperson.

However, only 8,997 or about nine percent showed up and qualified to vote at the precincts which opened as early as 8:00 a.m. to accommodate the voters from 15 towns and three cities of the province up to 3 p. m.

Some of those who came were not allowed to vote due to lack of identification cards and a copy of an Aleco bill.

Only a minimum of five percent of the 100,000 voters could already validate the referendum, according to Legazpi City Mayor Noel E. Rosal, spokesperson for the PSP scheme.

Saturday’s referendum was supervised by the Philippine Rural Electricity Cooperative Association.

The three districts of Albay voted as follows: First District had PSP – 941, C2C – 1,554; Second District voted with PSP – 2,139; C2C – 1,222; and Third District recorded 2,426 for PSP and 715 for C2C, for a total of 5,506 for PSP and 3,491 for C2C.

The two options were offered by the Department of Energy as schemes to rehabilitate the ailing electric cooperative.

With the winning of the PSP option, the San Miguel Power Corp., through its SMC Global Power Holding Corp., will run the cooperative as a private corporation guided by its technical bid accepted by the interim board.

“This will be a welcome development for Albay, considering that SMC is an A-1 corporation and very successful and Aleco will surely be given a new kind of management that we need for the future of our cooperative,” Rosal said.

The SMCGPHC technical bid provides, among others, that as sole and exclusive agent or concessionaire of Aleco, it will act on matters such as “applications for increase in tariff with the Energy Regulatory Commission (ERC), provided the Concessionaire shall only collect such tariffs that ERC may approve.”

On the fate of the existing operations and maintenance personnel of the cooperative, the bid says that Aleco shall indemnify, defend and hold the concessionaire, its directors, officers and employees free and harmless from any claim or action brought by the employees by reason of their separation from employment.

A the same time, the bid presumes the transmission assets and facilities necessary to connect the Aleco distribution system to the grid and assets used for conveyance of electric power from the transmission facilities or embedded generators to end-users are functioning and in good working order, and free from all liens and encumbrances.

This provision means, as required by the technical bid, that all equipment of Aleco for transmission and distribution be in good condition and considering that the technical systems loss the cooperative has been suffering are due to equipment that are in need of repair, Aleco must first restore them before SMC comes in.

“In its effort to improve the cooperative’s operations and profitability, SMC Global Power will make an initial investment of P1.2 billion. This amount will be released over a three to four-year period and constitutes a capital expenditure and working capital earmarked to rehabilitate Aleco,” SMC President Ramon S. Ang said in a letter earlier.

In terms of Aleco’s debt, SMC Global Power will implement a viable settlement plan for the payment of the P4-billion debt of Aleco.

“The paying of debt will be subject to the positive performance of the business and none of the debt will be passed on to consumers,” Ang assured, adding their immediate priorities are to rehabilitate Aleco, improve operational efficiencies and minimize systems losses.

“Over the next three years, SMC Global Power will work out a series of programs that include the upgrading and construction of new sub-stations, the correction of metering installations and the improvement of distribution lines,” the SMC boss explained.

Aleco’s debt has mounted to P3.7 billion, largely due to continuous losses for the past 18 years.

Based on DOE estimates, according to Albay Gov. Salceda, financial losses due to systems losses or power bought but not billed or sold amounted to P1.959 billion.

In 2012 alone, this amounted to P240 million. (PNA)

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