Aleco's choice

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By Delmar Carino

The Recloser

Wednesday, September 18, 2013


THE fate of debt ridden Albay Electric Cooperative (Aleco) now hinges on San Miguel Corp.'s subsidiary, SMC Global Power Holdings Corp., following the decision of the electric cooperative's member consumers to allow the conglomerate to run its affairs for the next 25 years in a referendum last September 14.

The country's electric cooperatives (ECs) have closely watched the developments on Aleco because the ailing utility became the venue for the clash between the "coop to coop partnership" (C2C) and "private sector participation" (PSP) -- two differing management approaches on how to rescue ailing electric cooperatives caught in the midst of a highly technical, financially demanding and human resource sensitive industry.

The C2C relies on the ability of tested and experienced electric cooperatives to help resuscitate a brother in the industry. The abled ECs will export its best practices to the disabled ECs. PSP, on the other hand, means private capital will come in and dip into the operations of the sick coops in an attempt to reengineer their operations.

And why is this corner bothering to share to you what appears to be a remote concern for Beneco? Beneco was actually the one being eyed to provide the template for the C2C to operate and arrest the skid of Aleco.

The C2C made Beneco popular among Albayanos. But the opponent on the other side of the fence was a business giant. SMC's bid to pump in millions of pesos into the electric cooperative coupled with its promise to settle Aleco's P4 billion debt, I suppose, was too tempting.

The C2C intended to showcase how a non-stock, non-profit electric cooperative could redo an ailing EC within the bounds of its humble resources and system of rate making provided by the Energy Regulatory Commission. Beneco had its nightmares in the 90s when its system loss and collection efficiency, among others, were at their worst. But Beneco was able to reverse itself. That's why it offered its hands to help Aleco.

Professor Wally Del Mundo of UP believes that the C2C can provide the necessary muscle to rev up Aleco's sagging future.

The member consumers of Aleco though have already spoken, We wish them luck and we hope their fortunes will see the light of day.
I am just curious how the NEA stood on the issue.

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The board of the Albay Electric Cooperative has accepted the proposed takeover of the coop by San Miguel Corp.'s energy unit.

Aleco spokesperson Hezel Morallos said the board sent the letter of acceptance to San Miguel after its meeting on Monday.

Under the proposal, San Miguel Corp.'s subsidiary SMC Global Power Holdings Corp. will manage Aleco for at least 25 years and shoulder its debt, which stands at more than P4 billion.

In Saturday's referendum, Albay consumers voted in favor of the private sector's takeover of Aleco, rather than an electric cooperative.
Last July, the National Grid Corp. of the Philippines cut off power in the entire province of Albay due to its unpaid debt. - ANC

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Under the terms of reference, SMC will only manage Aleco but not own the electric cooperative.

"The terms that are already clear is that San Miguel will not own Aleco. They will just run it and shoulder the debt and pay monthly concession fees," Energy Secretary Jericho Petilla earlier said.

Published in the Sun.Star Baguio newspaper on September 19, 2013.

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