SMC unit eyes takeover of Albay power cooperative

MANILA, Philippines - SMC Global Power, the power subsidiary of diversifying conglomerate San Miguel Corp. (SMC), has moved a step closer in its plan to take over the debt-ridden Albay Electric Cooperative (Aleco).

In a disclosure to the Philippine Stock Exchange (PSE) yesterday, SMC said Aleco’s interim board of directors has approved SMC Global Power’s bid for a planned takeover of the ailing cooperative.

The decision of the board will be subject to a referendum among cooperative members, the last hurdle before SMC Global Power can come in.

“However, the decision of the interim board, and the issuance of the notice of award shall be subject to the outcome of the referendum that shall be conducted by Aleco on Sept. 14, 2013,” SMC said in its disclosure.

Last month, Aleco was disconnected from the main grid because of mounting debts, plunging Albay province into darkness. It was reconnected the following day upon the intercession of Energy Secretary Carlos Jericho Petilla and after the cooperative agreed to disconnect their top 100 delinquent accounts.

The Philippine Electricity Market Corp. (PEMC) requested Aleco to be disconnected form the grid after it failed to settle its outstanding liabilities to power generators of roughly P1 billion.

PEMC operates WESM, the country’s trading floor for electricity.

Aleco’s total debts to electric companies and to the National Electrification Administration have ballooned to roughly P4 billion, according to data from the energy department.

As part of the rehabilitation plan, Petilla proposed the entry of the private sector such as SMC.

Manila Electric Co. (Meralco) and Aboitiz Power also expressed interest in taking over the cooperative but in the end, only SMC Global Power submitted a bid for the rehabilitation of the cooperative.

He said the Department Energy department is continuously assisting ailing electric cooperatives (ECs) such as Aleco to ensure the continued power service to their consumers and resolve their accumulated arrearages due the power generators and transmission service provider.