RP power co-ops poorly regulated — WB

Washington D – The World Bank has criticized the Philippine government for its failure to regulate properly the country’s electric cooperatives.

In a speech at the World Forum on Energy Regulation here, World Bank lead energy specialist Bernard Tenenbaum took note of some "bad examples" carried out by regulators on off-grid electrification.

Tenenbaum said the Philippines’ off-grid electrification was "heavy-handed," citing a study he authored in 2004 and released April 2006 showing that "prepared program for new mini-grids has more than 20 regulatory steps." This means the SPUG (small power utilities group) program under the National Power Corp. has too many regulatory steps.

With this, Tenenbaum recommended that "the regulator should be allowed to vary the nature of its regulation depending on the entity that is being regulated."

"The national or regional regulator should be allowed to contract out or delegate either temporarily or permanently regulatory tasks to either government or non-government entities," he said.

Another poor example the World Bank official noted is that "there was an unsuccessful self-regulation of these electric cooperatives."

"Our general recommendation is that there should be a presumption of "self-regulation" for cooperative and other community-based organizations. However this does not mean that the regulator should take a completely "hands-off" approach," he said.

The World Bank study also noted that it would be hard to believe that community-based organizations always exemplify good governance.

"Like any other local organization, they are susceptible to corruption and capture by local politicians for political purposes. This has been a major issue for the rural electric cooperatives in the Philippines," the study said."

According to the recent in-depth analysis of the Philippine cooperative movement, it concluded that Philippine cooperative managements "tend to be relatively fragile and isolated, making them susceptible to local corrupting influences."

This is a polite way of saying, the study said, that Philippine cooperatives have been vulnerable to takeover by local politicians.

"Once local politicians gained control, many cooperatives were "run into the ground" through economically unjustified grid extensions, padding of cooperative payrolls with supporters of the politicians, a general reluctance to raise tariffs, an unwillingness to pursue collections and sometimes even outright theft of funds," it said.

A 1989 World Bank report found that only 22 of the 117 Philippine electric cooperatives were commercially viable.