Lanao electric cooperative taps P256 million from NEA

MANILA, Philippines - Lanao del Norte Electric Cooperative Inc. (Laneco) has tapped a P256-million, five-year loan package with the National Electrification Administration (NEA).

The loan package has a nine percent interest rate per annum, a 12-percent default charge per annum, 15 years repayment period with a maximum of one-year grace period, and is subject to accelerated repayment scheme.

The Laneco loan program is aimed at improving its power distribution services in Lanao del Norte province.

“The loan is intended to finance the rehabilitation, revamp and upgrading of distribution lines; construction of power substation; acquisition of 69-kilovolt subtransmission line; and procurement of logistics and non-electrical projects,” NEA said.

Under the agreement, Laneco is required to maintain a system loss at single-digit level and a collection efficiency rate of not lower than 95 percent.

A high level of systems loss results in higher rates for subscribers of the electric cooperative. The maximum tolerable system loss for NEA is 14 percent.

Last year, electric cooperatives reported a drop in average system losses from 13.19 percent in 2008 to 12.59 percent. The reduction is said to be equivalent to savings worth P311.4 million.

In the same period, NEA reported that the lowest recorded system loss was at 4.08 percent by Cebu’s Cebeco III.

The electric cooperative must also file an application for a rate adjustment with the Energy Regulatory Commission (ERC) in case it cannot cover for the amortization of the loan. 

“Since release of the loan is on a five-year staggered basis, subsequent issuance is subject to submission/evaluation of progress accomplishment report on the previous one. Releases are subject to existing NEA policies and to other conditions as the NEA Board may impose in the future,” NEA said.

NEA is the state-run agency tasked with supervising and providing financing to electric cooperatives, which provide electricity services in rural areas in the country.

Last year, NEA released P1.73 billion in loans to electric cooperatives nationwide to improve their operations. Its payment collections, on the other hand, stood at P5.9 billion, representing a 100-percent efficiency.

Out of the 110 electric cooperatives that have loans with NEA, 55 have paid their amortizations in advance; 40 are current; while 15 have arrears..