Gov’t pushes private sector entry for Albay power firm

LEGAZPI City—It now appeared to be all over for Albay’s electric cooperative after the government energy agency said it could no longer bail out the ailing Albay Electric Cooperative (Aleco) that provided electricity to some 250,000 consumers in the province.

Edgardo Piamonte, National Electrification Administration (NEA) deputy administrator, said the best option to revive Aleco is for it to be privatized.

At the Aleco stakeholders’ forum on Thursday, Piamonte said the government could no longer save the cooperative since it has no more funds to assist financially-ill electric cooperatives.

He proposed the involvement of the private sector in its operation to improve service reliability.

The private sector participation would also improve Aleco’s financial standing and assist in meeting its obligations with the Philippine Electricity Market Corp. and other private power suppliers, said Piamonte.

House Minority Floor Leader and Albay Representatives Edcel Lagman and Fernando Gonzalez favored the entry of the private sector.

They said they welcomed the move provided it followed certain parameters which included the investor assuming all obligations of Aleco, providing affordable power rates to the consumers and protecting labor rights.

Gonzalez said the government has exhausted all corrective measures to save Aleco but it continued to sink.

Albay Rep. Al Francis Bichara said he wanted to look into other options, such as the government assuming all the liabilities of Aleco.

Albay Bishop Joel Baylon of the Diocese of Legazpi and Aleco crisis committee chairman said they have found cost-saving ways to stop the financial bleeding of Aleco but it needed further help to revive the cooperative.

Aleco insiders said some independent power producers are interested in acquiring Aleco, including the Aboitiz Group, the Lopez-owned Energy Development Corp. and business tycoon Manny V. Pangilinan.

Lawyer Lynne Rose Baroga, Aleco finance manager, admitted the cooperative could no longer sustain its operation because of the very high system losses it incurred.

“The electric cooperative is operating monthly on a deficit as a result of the system loss,” she stressed.

Aleco’s current system loss is at 22 percent, way above the 13-percent allowable cap by the Energy Regulatory Commission, she said.

Aleco subsidizes the system loss above cap which amounts to P14.16 million a month, she added.

Baroga said the cooperative’s collection efficiency has been 99 percent of the sales but this was not enough 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 substations and power lines, while the substations are not compliant with the Grid Code.

To solve the system loss problem, she said the cooperative would need huge funding to improve electrical distribution, system reliability and reduction of the system loss.

Aleco has been placed under the management of NEA to stem the financial bleeding but the cooperative is still operating at a loss and owed its power suppliers close to P3 billion in liabilities as of July this year.

Aleco owed the Power Sector Assets and Liabilities Management Corp. P1.8 billion in outstanding debts, the Wholesale Electricity Spot Market, P974 million and NEA, P200 million.