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Only SMC left in Albay power bidding

By: - Correspondent / @msarguellesINQ
/ 11:52 PM August 08, 2013


LEGAZPI CITY, Philippines —This city was hit by daylong brownouts over the last two days lasting up to eight hours just as the Albay Electric Cooperative (Aleco) held a bidding to privatize the operations of the troubled cooperative amid protest by some consumers.

Alvie Boral, Aleco spokesperson, said the brownouts, however, are due to power line repairs and not another disconnection by the National Grid Corp. of the Philippines (NGCP), which had cut Albay’s power supply on July 30 to Aug. 1 due to Aleco’s failure to pay its debts.

Wednesday’s power outage here and neighboring towns happened after a train on a test run accidentally hit a telecommunications cable and power lines in Barangay Bitano in this city, leading to a seven-hour outage.


Another eight-hour outage took place on Thursday to give way to maintenance work by NGCP.

As the outage hit the city’s downtown area on Wednesday, Aleco officials opened bids for the privatization of Aleco operations at Venezia Hotel here. They soon found that only one company, San Miguel Global Power Corp., has submitted a bid.

Meralco and Aboitiz Power Corp., which earlier showed interest in operating Aleco, informed Aleco that they were backing out due to uncertainty in recovering multibillion-peso investments.

Boral, in a phone interview, said members of the Aleco bids and awards committee (BAC), headed by Marie Rose Naparam, would start evaluating the proposal of SMC.

The Aleco BAC is expected to announce its decision during Aleco’s general assembly on Aug. 21.

At Wednesday’s bid presentation, SMC Global Power Holding Corp., represented by lawyer Avelino Cedo and Jose Marie Valte, said it would initially infuse P250 million for the rehabilitation of the cooperative. New transformers and equipment would be installed in three years, the SMC representatives said.

SMC would also provide P260 million for separation pay benefits of Aleco employees who would be retired under a downsizing program.

The winning bidder would have to manage Aleco for at least 25 years and assume more than P4 billion in debts, according to Boral.


Some consumers protesting the privatization held a rally outside the hotel while the bidding process on Wednesday was going on.

Aboitiz cited the absence of a preapproved debt repayment plan with Aleco’s main creditors for the P4-billion debt as one of its reasons for backing out.

In a letter signed by Aboitiz Power chief operating officer Jaime Jose Aboitiz, the firm said it “would need to invest hundreds of millions of pesos in Aleco to bring down its huge system losses” yet “be forced to absorb them without any ability to recover such system losses as an operating expense over a reasonable period of time.”

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TAGS: Albay Electric Cooperative, aleco, Aleco operations, Aleco spokesperson, Alvie Boral, brownouts, consumers, National Grid Corp. of the Philippines, NGCP
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