MANILA, Philippines – Electric cooperatives in Luzon and Mindanao that have failed to settle their power bills will be cut off from the grid.
This was what Energy Secretary Jose Rene Almendras said delinquent electric cooperatives face given the mounting debts that reached P13.477 billion as of end-June. This amount represents unpaid electricity sourced from power generators that the cooperatives have already distributed to their retail clients.
“We have been telling the electric cooperatives since Day One that days of free electricity is not around anymore because there is no free electricity,” Energy Secretary Jose Rene Almendras told reporters on Monday, September 17.
“We have privatized the cost of generating capacities,” the energy chief said.
He cited the cases of Albay Electric Cooperative (Aleco) and Lanao del Sur Electric Cooperative (Lasureco).
He said a rehabilitation plan is in place for Aleco, which has over a billion-peso debt with the Wholesale Electricity Spot Market (WESM), Power Sector Assets and Liabilities Management Corp. (PSALM), and other private power suppliers.
Almendras said that if Aleco could not remit payments by December, it will be disconnected from the grid.
Lasureco, on the other hand, needs to address its debts that have already reached P3.3 billion.
Impact on investments
Most of the 190 electric cooperatives are properly managed, Almendras said, but the delinquent ones stand out since they have an impact on the entire power system.
Interested investors in power generation are aplenty, but the bad credit record of many power buyers — especially the cooperatives that handle power distribution in areas not covered by giant ones like Meralco and Davao Light — continues to be a drag.
“If you have an unhealthy electric cooperative, even if they are willing to sign contracts, these contracts are unacceptable to financial institutions,” he said.
Almendras said this situation has put at least a dozen proposed power projects on hold since the “offtake arrangements” are not acceptable to the creditors and financial investors of the power industry players.
Almendras said that part of the reform agenda they have outlined include the pending National Electrification Administration (NEA) Bill that will change the NEA charter.
“The new NEA charter will hopefully put reforms in place to depoliticize the electric cooperatives. Electric cooperatives should be ran like any business with no politics involved,” Almendras said. – Rappler.com