LEGAZPI CITY: From nearly P4 billion four years ago, the financial nightmare confronting the Albay Electric Cooperative (Aleco) has already ballooned to P6.9 billion as of this month, according to a lawyer serving as legal counsel to the troubled local power distribution cooperative.
Lawyer Oliver Olaybal on Wednesday told the Philippines News Agency here that Php3.6 billion of this amount was incurred by the cooperative when its management was under the National Electrification Administration (NEA) from 2007 to Feb. 10, 2011.
Added to this now is the Php3.3 billion incurred after that period — broken down as Php1.3 billion in interest charges; Php1 billion representing operating deficits under the present management, Albay Power and Energy Corporation (APEC); and Php1 billion covering the cost of rehabilitation, Olaybal said.
APEC is a subsidiary of San Miguel Corp.’s Global Power Holdings Corp. (SMC Global) which was created to handle the business and management of Aleco starting in February 2013 following its privatization worked out by the NEA, Department of Energy (DOE), Albay Bishop Joel Baylon, the NEA-appointed chairman of cooperative’s interim board of directors and supported by Albay Gov. Joey Salceda.
The privatization was said to be intended to bail out the cooperative from its financial troubles amounting to around Php4 billion, incurred over years of mismanagement, corruption and deep political meddling.
The APEC’s take-over of the operations of Aleco is under the concession agreement entered into by the NEA-designated interim board of the cooperative, which stipulates that the former will begin paying off the obligations of latter using half of the operating profits to be earned after five years.
“At present, the utility is losing Php90 million monthly or P1.08 billion per annum and, should no turnaround takes place in the next four years, the interest charges will increase the liability of Aleco to Php10.9 billion by 2019,” Olaybal warns.
If, in the meantime, the San Miguel group is extending loans to APEC, the accumulated borrowings could be beyond the financial resources of Aleco to pay, he said, adding that “at present, the magnitude of the problem is still manageable, that is, through stock issuance under Republic Act 10531 from where it could raise around Php8 billion in interest-free capital.”
This measure is among the rehabilitation plans that the new management of the cooperative is instituting should it wins back its business and operations through a case now pending with a local court assailing the rights of SMC Global/APEC to exercise Aleco’s corporate powers, operate its franchise and utilize its assets.
Filed by the complaining members, through its new board of directors and president Jaime Chua, the case is based on their claim that the lease of the cooperative’s franchise and assets is not in conformity with the law being devoid of consent from its member-consumers, among other discrepancies surrounding the concession agreement.
They petitioners are asking for an injunction with prayers for temporary restraining order and temporary mandatory order against the private firm.
Other parts of the rehabilitation plan is the reduction of debts by requiring the creditors to prove their claims before the rehabilitation court, to reduce the payables by 50 percent; sourcing of funds from the capital market, through the designation of a group of investment underwriters; and distribution system modernization.
It would also opt for an in-house manufacture of equipment in partnership with reliable entities to reduce procurement cost; and work on local power production, also in partnership with others to reduce power cost by doing away with the transmission charges of the National Grid Corp. of the Philippines (NGCP).
On the institutional front, Aleco shall introduce corporate governance, to be carried over to the new management when the cooperative shall now be managed by the board of directors to be elected under the Corporation Code or under the Cooperative Development Code.
The cooperative shall also update its list of members, using government census data to delist the names of deceased members and/or update the names of current account holders and take inventory and appraisal of existing and after-acquired assets.
“Aleco shall determine and impute liability for operating deficits incurred since 2006, and create a legal team to collect these deficits from the guilty parties with attachment of assets, as well as hold them criminally liable separately for syndicated estafa, if necessary.
The APEC management through its general-manager Manuel Imperial refused to comment on the figures on the present financial encumbrances of the cooperative as claimed by Olaybal.
The NEA, on the other hand, said it is not recognizing the existence of the new Aleco management and board of directors.
NEA Edita Bueno, in a recent statement, said “it bears emphasizing, at the outset, that the franchise to operate and manage the electric distribution utility in the Province of Albay exclusively belongs to the Albay Electric Cooperative, Inc. unless awarded to another by way of concession or other legal modes.”
Presently, she said, SMC Global, through its subsidiary, APEC, legitimately operates and manages the electric distribution system of Aleco, “solely and exclusively, pursuant to the Concession Agreement mandated by the member-consumers in the 14 Sept, 2013 referendum conducted for the purpose.” PNA