San Miguel needs P1B to rehabilitate Albay electric cooperative

MANILA, Philippines – Ramon Ang-led San Miguel Corporation needs to shell out some P1 billion to rehabilitate the ailing Albay Electric Cooperative (Aleco), according to Albay Governor Joey Salceda.

At a power industry seminar, Salceda said SMC Global Power Holdings Corporation, the power arm of San Miguel, needs to upgrade and replace the equipment of Aleco and this will cost around a billion pesos.

On September 24, San Miguel signed an agreement to manage the operations of the cooperative for 25 years.

Salceda said the takeover may put an end to Aleco’s financial struggle, which started in the mid-1990s.

“The entry of San Miguel will be most welcome” he noted.

He said some of Aleco’s facilities are obsolete, while others are in dire need of an upgrade. The upgrade will minimize the cooperative’s systems losses, the main reason why it became cash-strapped.

“At present, Aleco’s system loss is 24%, considerably higher than the cap of 13%,” Salceda stressed.

Aleco also reportedly owed various creditors nearly P4 billion.

The Philippine Electricity Market Corporation, which operates the wholesale electricity spot market, earlier ordered Aleco to be disconnected from the grid for failure to settle its debts.

The disconnection resulted in province-wide blackout in Albay. Power was only restored upon the intervention of the Department of Energy, and after Aleco agreed to be taken over by the private sector. – Rappler.com