Saving a losing cooperative

By Herbert Vego

THIS may sound like a lament against the “dying of the light” in Bacolod City and five other cities and towns in Negros Occidental.  But the proposed joint venture between Ignite Power (the new subsidiary of MORE Power) and Central Negros Electric Cooperative (Ceneco) is aimed at revitalizing the latter.

To quote Ceneco acting general Arnel Lapore, “It will give fresh life to Ceneco.”

The 45-year-old Ceneco, which has a customer base of 210,000 households and establishments, is losing ₱15 to ₱20 million a month due to system’s loss – electricity wasted or lost to pilferage — that exceeds more than 10% or higher than the 8.25% cap allowed by the Energy Regulatory Commission (ERC). Any amount in excess of that cap is charged to the cooperative.

Ceneco – the only remaining electric cooperative based in a highly urbanized city (Bacolod) — owes more than ₱600 million to the National Electrification Administration (NEA) and the banks. It also covers Bago City, Talisay City, Silay City and the  municipalities  of Murcia and Salvador Benedicto.

The co-op’s application for infusion of additional capital expenditure has been disapproved by the Energy Regulatory Commission (ERC).

Thus, it is no longer capable of rebuilding or rehabilitating its obsolete substations and facilities necessary to sustain its operation. No wonder, it has become “normal” for unscheduled power outages to occur.

Unless rescued, the co-op could collapse on its debt weight before the expiration of its franchise in 2030. In that case, it would no longer be in  a position to renew its franchise.

Because of that grim possibility, no less than Bacolod City Mayor Alfredo Abelardo “Albee” Benitez has said his “conditional yes” under certain conditions to be discussed.

The mayor expressed his hope that the joint venture would result in lower power cost, improved services with less power interruptions, and maximized renewable energy use.

No less than Ignite Power President Roel Z.  Castro met with Ceneco officials and other stakeholders on April 13 to brief them on the salient points of the joint venture agreement (JVA).

Under that JVA, Ignite Power would rescue the “bleeding” electric distribution utility which could no longer cope with its accrued financial obligations to power suppliers and contractors.

Ignite Power would “ignite” stability by parlaying 70% of the value of CENECO assets. For instance, if the assets are worth ₱2 billion, Ceneco would receive ₱1.4 billion.

However, enough of sweet litanies for now, since there is no” done deal” yet. The final deal would depend on the result of ongoing consultations with Ceneco employees, union leaders and power consumers, among others.

 

Ceneco manager Lapore expects a smooth transition from a cooperative to a joint venture on preferential hiring of incumbent employees. This should result in the exit of corrupt and inefficient employees and retention of the good ones. Those who could not be rehired would receive separation or retirement benefits.

Being an affiliate of MORE Power, the “newness” of Ignite Power would be no problem. MORE Power has already proven itself capable of modernizing its operation in Iloilo City on an investment of ₱2 billion in its first three years, and a forthcoming ₱1 billion more in the next two years of its five-year modernization program.

MORE Power has reduced its system’s loss from 30% when it took over in 2020 to only an average of 6.6% because of its successful anti pilferage campaign.

So, why be afraid of Ceneco falling into capable private hands?