LEGAZPI CITY – The National Power Corp. (Napocor) is taking over the operation of cash-strapped Albay Electric Cooperative (Aleco) effective July 26, under a memorandum of agreement signed Wednesday morning.
Cyril del Callar, Napocor president, and Rodolfo Bonafe Jr., Aleco president, signed the agreement at the Provincial Disaster Coordinating Council Hall before Albay Gov. Joey Salceda and members of the provincial board.
Also witnessing the signing were Lorenzo Marcelo, Napocor vice president for small power utilities group; Alexander Japon, Napocor senior department manager; and Edita Buenao, head of the National Electrification Administration (NEA).
Del Callar said, “We are here together with the National Transmission Corp. (TransCo), which will become the National Grid Corp. in the last quarter this year. We call this partnership, not a takeover… And I will assure all the employees of Aleco that Napocor will respect all the rights of the employees.”
Del Callar said Napocor signed the agreement “to bring all the resources of the national government.”
“What is important is that we have to stop the bleeding,” he said, adding that Aleco owes TransCo half-a-billion pesos, and Napocor, P1.6 billion.
Del Callar appointed Napocor-Tiwi manager Gerry Silva as the new operations manager of Aleco effective July 26.
Under the agreement, Napocor will provide Aleco with management, financial, accounting and technical support for a year.
With this set-up, Aleco is spared from power disconnections and can make deferred payments on back interest and service charges.
However, under the deal, Aleco has to pay two percent of its total monthly power purchase from Napocor.
Del Callar appealed to Aleco’s labor union to keep lawyers away from meddling with the partnership, urging everyone to provide quality service to the cooperative’s 182,224 household consumers.
Before the agreement was signed, Albay Reps. Al Francis Bichara (second district) and Reno Lim (third district) initiated an inquiry by the House committee on energy headed by Rep. Mikey Arroyo into the operation and management of the bankrupt electric cooperative.
During the hearing, Aleco was found saddled with low collection efficiency as well as operation problems like high system losses, labor cases, and outmoded transmission and distribution equipment.
Salceda recalled that President Arroyo earlier directed the Napocor to help run the financially distressed cooperative to ensure its financial viability.
“Definitely this is just a transition toward an eventual competition in the distribution utilities where private entities will be encouraged to invest,” he said.
“One option was to file a case for bankruptcy which cannot be TRO-ed. Under oue law a creditor-initiated corporate rehabilitation cannot be TRO-ed,” he told The STAR.
“So I suggested to Cyril that we could solve the problem through cooperation and not in an adversarial relation. If Napocor files a case of bankruptcy against Aleco, it shows that Albayanons don’t know how to pay their power bills,” he said.
“That is not the kind of image that I want (for) Albayanons. So I tried hard to find a way to solve the problem of Aleco in a systematic and orderly manner through a kind of partnership like an (operation and management) contract,” said Salceda, one of President Arroyo’s economic advisers.
“This is a transition strategy because there is no private investor who would gamble to invest in an electric cooperative with an outstanding debt of P1.7 billion with Napocor, TransCo and NEA,” he said.
ALECO, founded in 1974 as the first electric cooperative in Bicol, used to be a model electric cooperative in the country.