SMC needs P1B for rehab of Albay power co-op

MANILA, Philippines - Diversified conglomerate San Miguel Corp. needs to spend P1 billion to rehabilitate and upgrade the operations of ailing Albay Electric Cooperative (Aleco), a local government official said yesterday.

San Miguel Corp. subsidiary SMC Global Power Holdings Corp. took over the management of Aleco after its consumers voted to allow the entry of San Miguel as the white knight of the debt-ridden cooperative.

On the sidelines of a seminar on the power sector yesterday, Albay Gov. Joey Salceda, said Aleco would need P1 billion to jumpstart the cash-strapped cooperative, which has debts of roughly P3.7 billion.

“San Miguel needs P1 billion for rehabilitation and systems improvement,” Salceda said.

He agreed that Aleco is better under the management of the private sector.

“Today, Aleco’s system loss is 24 percent compared to the cap of 13 percent,” Salceda pointed out.

He attributed Aleco’s situation to its failure to collect from its customers and also to systems losses stemming from its obsolete equipment.

Once rehabilitated, however, Salceda said Aleco would be able to generate revenues of about P600 million annually.

San Miguel will manage the operations of Aleco for 35 years, with the option to extend for another 25 years.

Last July, Aleco was disconnected from the main grid due to its mounting debts, plunging Albay into darkness. It was only reconnected upon the intercession of Energy Secretary Carlos Jericho Petilla and after the cooperative agreed to disconnect its 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.