ERC OKs P113 million loan for Pangasinan coop

MANILA, Philippines - The Energy Regulatory Commission (ERC) has approved the plan of a Pangasinan-based electric cooperative to borrow P113 million from the Bank of the Philippine Islands (BPI).

In a public notice, the power sector regulator said Pangasinan I Electric Cooperative Inc. (PANELCO I) can tap the funds for its rehabilitation and expansion projects.

PANELCO I has allotted P127.108 million for its 2009-2011 capital expenditures program.

The project includes the installation of a 10-megavolt ampere substation in Daol, Pangasinan; acquisition of circuit breakers and the replacement of an existing distribution transformer.

PANELCO I offered the project for public auction where it received a bid of P113.221 million.

The rehabilitation and expansion program is needed to enhance the power distribution in Pangasinan.

“Power outages will be frequent and substation tenders and equipment will continuously be exposed to hazards that could cause circuit breakers to explode,” PANELCO I said.

“Thus, failure to implement the said projects would surely have a detrimental impact on its ability to provide efficient service,” it added.

BPI has earlier certified that it will partially finance the expansion project of PANELCO I.

Electric cooperatives are required to secure an ERC approval prior to borrowing from banks.

Under the deal with BPI, the loan shall be payable for a maximum of seven years, including a one-year grace period.

The loan will be paid in quarterly installments of P2.825 million.

BPI will release P11.3 million every year from 2012 to 2016, and then P56.5 million for 2017.

Including the interest rate of five percent, PANELCO I is required to pay back P148.533 million to BPI.

“A thorough study reveals that the repayment of the principal and interest on the said loan would not cause any increase in power rates after the implementation of the said capital expenditures,” ERC said.

ERC said the loans will be secured by Local Government Unit-Guarantee Corp. under an Electric Cooperative Partial Credit Guarantee Program.

The Reinvestment Fund for Sustainable Capital Expenditures facility will shoulder the balance of P221,098.