Energy Secretary Raphael P. M. Lotilla said the IMC would enable Casureco to improve the delivery of electricity within its franchise area.
Lotilla said the IMC scheme encouraged poor performing electric cooperatives (EC) to partner with private investors to implement much needed reforms in operations and management.
The IMC is a contract between a willing EC and a private investor whereby the investor will infuse risk capital and provide management expertise. Casureco IV is the first electric cooperative to enter into an IMC.
Although under an IMC with SPC, Casureco IV will retain its franchise. At the same time, Casureco IV will retain ownership of its assets, as well as control over setting the standards of service to its customers.
The energy chief said the entry of a private investor through an IMC will significantly help improve the performance of an ailing cooperative by assisting them to secure financing and management expertise to improve their operations.
Lotilla also urged other low performing ECs to avail and access investment capital and management expertise from private sector entities through the IMC scheme.
Casureco IV, servicing the towns of Caramoan, Garchitorena, Goa, Lagonoy, Ocampo, Presentacion, Sagñay, San Jose and Tigaon in Camarines Sur in the Bicol Region, is one of the largest electric cooperatives in the country. As of July 2006, its systems losses reached 20.12 percent from 17.43 percent in Dec. 2005.
SPC won the competitive and transparent bidding conducted to secure the most suitable investor that will offer the best arrangements to meet Casureco IV’s needs. Salcon is required to infuse initial investment amount of P63,190 for the rehabilitation of Casureco IV.
The power firm will also pay Casureco IV fixed quarterly lease payment equivalent to 4.25 percent of the gross revenue in exchange for Salcon’s right to manage Casureco IV operations.
Castalia Strategic Advisors Inc., a New Zealand-based consultancy firm, was the transaction advisor which conducted financial and technical evaluation of Casureco IV in preparation for entering into an IMC.