Home Forex NEA set to supervise Albay power utility in transition

NEA set to supervise Albay power utility in transition

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THE National Electrification Administration (NEA) is set to exercise its supervisory power over the operation of Albay Electric Cooperative, Inc. (Aleco), which distributes power in the Bicol province.

In a media release on Monday, NEA said that the move was prompted by the decision of the cooperative’s member-consumer-owners to terminate the concession agreement between Aleco and SMC Global Power Holdings, Inc., which owns Albay Power and Energy Corp. (APEC).

NEA said the operations of the power distributor are set to revert to Aleco from APEC in the first quarter of next year based on the electric cooperative’s board resolution, which “unanimously invoked the default provision under Section 21.1.1” of the concession agreement.

The agency said Aleco invoked the supervisory power of NEA under the law to start the required preparations to assist in the transition “until it becomes financially and technically viable to manage its operations.”

It also said Aleco will not take over the usual operations “until the exhaustion of the period as required by the said clause which should not be later than Feb. 25, 2023.”

According to NEA, APEC has not satisfied the requirements and deliverables under the concession agreement.

It said that based on an audit conducted in March 2021, there were deficiencies in the performance of APEC as a concessionaire of Aleco. The audit showed that the system loss stayed above the system-loss cap set by the Energy Regulatory Commission, NEA said, resulting in “huge subsidized costs thereby negatively affecting its financial viability. “

“Also, the collection efficiency remained well below the standard set by NEA and the audit further reveals that with the financial status of APEC, it showed no sufficient cash to pay its maturing obligations,” the agency added.

Sought for comment, San Miguel Corp. President and Chief Executive Officer Ramon S. Ang told reporters on Monday that he would let NEA take over the power distribution in Albay. SMC Global Power is the listed conglomerate’s power generation arm. — Ashley Erika O. Jose

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