Cepalco takes over Olongapo power distribution

MANILA, Philippines – To improve the electricity distribution system in Olongapo and meet the demands for power supply, the city government has entered into a public-private sector partnership with the Cagayan Electric Power and Light Co. (Cepalco), a power distribution utility operating a franchise area in southern Philippines.

The $13.3-million deal involves the rehabilitation, management, operation, maintenance and expansion of Olongapo’s power distribution service previously handled by the city’s Public Utilities Department (PUD).

Before the entry of Cepalco, Olongapo’s PUD was reportedly incurring high system losses with accumulated obligations to settle with the Power Sector Assets and Liabilities Management Corporation (PSALM) from power it sourced from the National Power Corp.

With the influx of investors and booming business activities in the city, officials said increased power demand can be best addressed by Cepalco.

Mayor James “Bong” Gordon Jr., said the public-private partnership deal for Olongapo’s power system addresses the demand for reliable supply of electricity by local residents and business enterprises.

“Given the government’s limited resources, it is only through private sector management that modernization and improved services can be achieved,” said Gordon.

“Having an efficient and viable electric distribution company for a highly urbanized city like Olongapo is central to the city’s development because of its impact in terms of being able to attract new businesses resulting in more jobs and a better quality of life for thousands of households,” said Jesse Ang, resident representative of the International Finance Corp. (IFC), the private sector arm of the World Bank which facilitated the bidding process and sale.

Cepalco has already paid 50 percent of the sales proceeds and the remaining 50 percent is due to be paid once the company acquires a new franchise from Congress as required of all power distribution utilities.