NEA set to takeover Albay electric coop anew

By Myrna M. Velasco – October 4, 2022, 2:53 PM
from Manila Bulletin

Government-run National Electrification Administration (NEA) will take over again the operation and management of the Albay Electric Cooperative (ALECO), after the member-consumer-owners (MCOs) of the power utility moved for the termination of its concession agreement (CA) with Albay Power and Energy Corporation (APEC) of the San Miguel group.

“The reverting of operations from APEC to ALECO will happen circa first quarter next year based on the ALECO Board Resolution No. 58 which unanimously invoked the default provision under Section 21.1.1 of the CA,” NEA noted in a statement to the media.

The electrification agency qualified it “shall not takeover of the usual operations until the exhaustion of the period as required by the said clause which should not be later than February 25, 2023.”

NEA expounded the specified timeline had been set “in view of the preparations and groundworks that shall be arranged by ALECO.”

The agency thus emphasized that “pending takeover, the APEC shall continue to perform the terms of the concession agreement in order not to disrupt the services that ought to be given both by APEC and ALECO to the MCOs.”

It was in 2013 when APEC of the San Miguel group won the concession deal for the Albay electric cooperative; and part of the agreement then was for the former to shoulder the settlement of at least P4.0 billion worth of outstanding financial obligations of the power utility.

In the targeted new round of takeover in the power utility, ALECO had invoked “the supervisory power of the NEA,” as anchored on Presidential Decree No. 269, as amended by Republic Act No. 10531 or the NEA Charter.

At this stage, the electrification agency indicated that “the required preparations and groundworks may now be commenced to assist ALECO in the transition until it becomes financially and technically viable to manage its operations.”

Last month, the Albay electric cooperative carried out its special general membership assembly where its MCOs had been apprised on the audit findings of NEA during the operational tenure of APEC.

“Based on the audit which was conducted last March 2021, there are deficiencies in the performance of APEC as a concessionaire of ALECO,” NEA said.

According to the audit outcome, the power utility’s system loss “remained well above the system loss cap set by the Energy Regulatory Commission (ERC) which resulted in huge subsidized costs, thereby negatively affecting its financial viability.”

At the same time, NEA cited that the collection efficiency of ALECO “remained well below the standard set by NEA and the audit further reveals that with the financial status of APEC, it showed no sufficient cash to pay its maturing obligations.”

The agency further stated that “APEC has not satisfied the majority of the major requirements and deliverables under the Concession Agreement, as reflected in the monitoring report of ALECO and as noted by the audit team of NEA.”

Being a prescribed option, NEA conveyed that “the MCOs unanimously voted to terminate the agreement and this decision was adopted by the ALECO board of directors.”