San Miguel Corp. (SMC) is reportedly buying ailing electric cooperatives in Bicol as part of its plan to monopolize power distribution in the region, the head of an anti-crime and corruption watchdog said on Thursday.
Dante Jimenez, chairman of the Volunteers Against crime and Corruption (VACC) and concurrent regional lead convenor of the Bicol Autonomy Movement (BAM), said that residents are “up in arms,” convinced that the concession agreement awarded to SMC would “surely jack up power rates.”
“The award of the concession agreement was not aboveboard. In fact, it was railroaded. This is the direction being taken by Ramon Ang, to gobble up electric cooperatives. He started with Albay Electric Cooperative [Aleco]. Next in line is the Camarines Sur Electric Cooperative [Casureco],” Jimenez told The Manila Times.
Ang is SMC president.
“They [SMC] want to control all cooperatives in Bicol that’s why the power sector will be under the monopoly of three families—g for distribution, Aboitiz, which controls Tiwi Albay geothermal plant, and the Lopezes who control the Bacman geothermal plant in Sorsogon,” Jimenez added.
The award of the management of Aleco to SMC was formalized on October 29, after the giant conglomerate won the bidding for the rehabilitation of the cooperative. Jimenez said SMC was the lone bidder.
“The legal process was not followed. It was part of their design to ultimately take control of the entire industry,” he said.
SMC Global Power Holdings Corp. (SMC Global), SMC’s power generation subsidiary, is scheduled to assume control of Aleco in January. SMC Global said it will use another subsidiary, Albay Power and Energy Corp. (APEC), to operate the country’s sixth largest power retailer.
In preparation for the takeover, APEC is updating the list of Aleco member-consumers numbering about 320,000 in the province’s 15 municipalities and three cities.
SMC will manage the cooperative for 35 years, which could be extended for another 25 years. It reportedly stands to earn about P600 million annually once fully operational.
Gov. Joey Salceda of Albay was quoted as saying that the entry of SMC was a form of investment that is worth P4.7 billion.
It was learned that Aleco was declared bankrupt by the National Electrification Administration (NEA) and the Department of Energy (DOE) because of its P4 billion debt, mostly due to mismanagement and corruption.
NEA has been operating the cooperative for more than 10 years.
On the other hand, areas serviced by Casureco experienced outages for more than a week after the National Grid Corp. of the Philippines cut them off the grid for failure “to pay its P37 million debt due its supplier San Miguel Electric Corp. on November 26.”
Casureco officials said residents of Iriga City and the municipalities of Balatan, Buhi, Bula, Bato, Baao, and Nabua were without electricity for several days.
At the House of Representatives, a lawmaker warned that the P4.15 per kilowatt-hour power rate increase implemented by the Manila Electric Co. (Meralco) could trigger higher unemployment if the government does not step in.
Rep. Sherwin Gatchalian of Valenzuela City, where 90 percent of the businesses are family owned, said many businesses could close because of high electricity rates.
The record rate hike can push businesses to the extreme and prompt streamlining or stoppage of operations, Gatchalian said.
The government, he added, cannot afford to dilly-dally in aiding small and medium scale industries and securing the people’s jobs.
“The extraordinary power hike is unforgiving, harsh and heartless. I talked and consulted entrepreneurs and businesses about the impact of the power rate increase on their operations and they are very worried about their survival,” Gatchalian said.
Meralco is the country’s biggest power distributor, covering at least 70 percent of the 72 billion kilowatt hours consumed annually.
Electricity accounts for 30 percent of small and medium enterprises’ expenses, while labor makes up 20 percent.
Meralco earlier told lawmakers its rate reached a historic high because of unannounced, simultaneous shutdown of nine power plants—Sual, GN Power 2, Santa Rita Module 20, Santa Rita Module 30, Ilijan 2, QPPL, Sual 1, Calaca 1 and Masinloc 1.
The plants went off the Luzon grid while the Malampaya natural gas plant was undergoing annual maintenance work, raising suspicions of a collusion among power producers to raise prices at the power spot market.
Rep. Antonio Tinio of ACT Teachers had said three power producers can dictate the price of electricity—Therma Mobile and Bauang Diesel Power Plant, which is operated by the Aboitiz group, and the Limay Combined Cycle Plant owned by Millennium Holdings Inc. of businessman Mike Valencia.
Aboitiz denied operating the Bauang Diesel plant. It also said Therma Mobile, which runs the diesel power barges moored in Navotas, does not benefit from any price movement in the Wholesale Electricity Spot Market (WESM) because it is paid an agreed rate under its Power Supply Agreement (PSA) with Meralco.
Aboitiz, in a statement, said that under its capacity-based contract, Meralco has full control of the use of the 100 megawatts from Therma Mobile, including pricing and volume offers to the WESM. Therma Mobile is only paid the rate covered by its supply agreement and does not benefit from the high market prices.
With Reports From Jhoanna Ballaran and Llanesca T. Panti