Electric co-ops need P42-B fresh funds – NEA

MANILA, Philippines - Electric cooperatives need P42.22 billion for their capital projects from 2012 to 2015, according to the latest data from the National Electrification Administration (NEA).

The P42.22 billion translates to an average funding requirement of P10.56 billion a year for the three-year period, data also showed.

The requirements are necessary for electric cooperatives to function effectively and continue providing power supply to far-flung villages and remote areas in the country.

To help raise funds for the capital projects of the different electric cooperatives, NEA would provide part of the requirements through loan releases.

NEA is targeting to release P1.5 billion this year, higher than last year’s allocation of P1.28 billion.

In 2011, NEA’s loan releases reached P931 million or an average of P1.210 billion a year for the past five years.

NEA administrator Editha Bueno said in a recent interview that the agency now has more strength to oversee the operations of cooperatives to ensure that losses are minimized following the strengthening of NEA’s charger.

Last May, President Aquino signed into law the measure that strengthens the NEA through charter amendments.

RA 10531 or An Act Strengthening the National Electrification Administration, Further Amending for the Purpose Presidential Decree 269, as Amended Otherwise Known as the National Electrification Administration Decree, was signed on May 7, 2013.

The new law essentially gives NEA more teeth over electric cooperatives, some of which are financially bleeding and heavily indebted because of mismanagement and unpaid services.

For instance, the law strengthened NEA’s authorized capital stock to P25 billion from P1 billion originally.

It also allowed NEA to act as guarantor to electric cooperatives in their transactions to various parties including their power supply contracts.

Furthermore, according to the new law, NEA may now grant loans to electric cooperatives for the construction or operation of subtransmission and distribution facilities necessary to supply power to their service areas.

Another amendment provided by the new law is the so-called step-in rights in cases of ailing cooperatives.

“The NEA shall immediately step-in and take over from its board the operations of any ailing electric cooperative. Within a reasonable period after take-over, the NEA may convert the ailing cooperative to either a stock cooperative registered with the Cooperative Development Authority or a stock corporation registered with the Securities and Exchange Commission,” the legislation stated.

To further improve the operations of electric cooperatives, the approved measure also allows NEA to require the monthly submission of reportorial requirements as may be necessary relative to their operations.

The reports shall include cooperatives’ monthly financial reports, engineering reports, audited financial statements, annual cash operating budget, five-year investment plan as well as summary of complaints received.