Aleco takeover issues continue to hound SMC

MANILA, Philippines - Food-to-infrastructure conglomerate San Miguel Corp., the white knight that came to the rescue of the ailing Albay Electric Cooperative, has expressed frustration over lingering issues surrounding its takeover the country’s energy chief said.

“San Miguel is frustrated. It’s a learning curve for them,” Energy Secretary Carlos Jericho Petilla said.

He said San Miguel has not been able to fully implement reforms within Aleco due to continued protests against its takeover of Aleco.

At the same time, Petilla said the Department of Energy (DOE) sees no need to intervene just yet as he believes the issues can still be addressed by concerned parties.

He urged stakeholders in Albay to support San Miguel given the investments it has made on the cooperative.

“What (San Miguel) needs is support from everyone because that’s perhaps what they are telling themselves now, ‘why are we still here?.”

In October last year, San Miguel signed a takeover agreement with Aleco, a cooperative with debts running up to P4 billion.

San Miguel has committed to pour in an initial P600 million to fund the capital expenditure requirements for the next three years and to fund the separation pay of employees affected by the takeover.

Aleco’s system loss is 24 percent compared to the cap of 13 percent. 

Once Aleco is rehabilitated, San Miguel is estimated 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.

In July last year, Aleco had been disconnected from the main grid because of mounting debts, plunging Albay into darkness.

Aleco’s total debts to electric companies and to National Electrification Administration have ballooned to roughly P4 billion.