SOCOTECO II faces PHP 2.1-billion loss, infrastructure backlog

GENERAL SANTOS CITY — The financial and operational condition of the South Cotabato II Electric Cooperative (SOCOTECO II) came under renewed scrutiny as local officials pressed the cooperative’s management for answers on its mounting losses, delayed infrastructure projects, and continuing challenges in delivering reliable electricity to member-consumers.

At the center of the discussion was the cooperative’s reported PHP 2.1-billion accumulated loss as of 2025, alongside a PHP 521.8-million net loss for the same year.

The figures have intensified concerns about the cooperative’s financial sustainability and its ability to fund the modernization of an aging distribution system serving South Cotabato, Sarangani, and General Santos City.

One of the major issues raised was SOCOTECO II’s capital expenditure (CAPEX) program, with projects covering 2015 to 2023 still subject to regulatory processes before the cooperative can fully recover its investments through approved charges.

Engr. Lowell Valiente, corporate planning manager of SOCOTECO II, acknowledged that the cooperative had not exhausted all necessary measures to expedite the approval of the projects.

The delays have resulted in repeated pre-filing and refiling of applications, further complicating the cooperative’s efforts to secure funding for critical infrastructure.

Management also disclosed that a new CAPEX application covering 2024 to 2026, with a proposed cost of approximately PHP 1 billion, is in the pipeline.

The backlog comes as the cooperative faces an estimated PHP 10-billion requirement for system rehabilitation, with aging substations, overloaded facilities, and the need for improved distribution lines making modernization an urgent concern.

Management reported a negative cash flow of approximately PHP 900 million, which has forced the cooperative to rely on operational resources, including its Distribution, Supply and Metering (DSM) fund, to finance emergency infrastructure work.

These resources were used for urgent requirements at facilities, including substations serving Glan and Malapatan, where immediate interventions were needed to prevent equipment failure and keep electricity service running.

Management said funds spent on capital-related emergency projects could eventually be returned to the general fund once the Energy Regulatory Commission (ERC) approves the recovery of the corresponding capital assets.

Local officials, however, questioned whether repeatedly using operational funds for capital requirements could increase financing costs and interest obligations, adding pressure on the cooperative’s finances and, ultimately, its member-consumers.

The concern is significant because SOCOTECO II’s monthly losses have averaged PHP 46 million, according to figures presented during discussions of the cooperative’s financial condition.

To address its funding shortfall, SOCOTECO II has turned to loans from the National Electrification Administration (NEA) and commercial banks.

The cooperative has reportedly secured NEA approval for approximately PHP 2 billion in financing for CAPEX projects covering 2015 to 2023, but the estimated cost of those projects has reached around PHP 2.7 billion, leaving a substantial gap.

While borrowing could fund the rehabilitation of substations, replacement of aging equipment, and improvement of the distribution network, the cooperative’s capacity to sustain additional debt remains a concern.

The delayed ERC approval of CAPEX projects thus affects the cooperative’s ability to recover infrastructure investments, secure financing, and plan future improvements with greater certainty.

SOCOTECO II also reported progress in reducing system loss, bringing the average down to approximately 12% from a previous high of 15%.

The improvement was attributed to a catch-up program that includes large-scale meter replacement, efforts to improve the accuracy of electricity measurement, and a stronger campaign against electricity pilferage.

The cooperative acknowledged, however, that it rarely pursues criminal charges against individuals suspected of stealing electricity, often opting for amicable settlements instead.

Pilferage and other technical and nontechnical losses can undermine revenue collection, increase pressure on paying consumers, and reduce the resources available for system rehabilitation.

The cooperative’s reported losses, delayed CAPEX projects, aging facilities, and limited access to capital have created a situation in which short-term measures may no longer be enough to address the underlying problems affecting homes, businesses, schools, and livelihoods that depend on reliable power.

Against this backdrop, the proposed Conditional Joint Venture Agreement (CJVA) between SOCOTECO II and Ignite Power and Energy Holdings Inc. has been presented as a potential long-term solution.

The proposed partnership is intended to bring in private-sector capital, technical expertise, and stronger operational capacity while addressing infrastructure requirements the cooperative has struggled to finance on its own.

Under the proposed arrangement, Ignite Power would undertake substantial investments in the distribution system, including the rehabilitation and modernization of facilities, subject to the terms of the agreement and the required regulatory and institutional approvals.

The CJVA is also being presented as a means to address the cooperative’s accumulated losses, improve operational efficiency, and establish a more sustainable financial structure that would allow it to move beyond emergency repairs.

Supporters of the agreement argue that a long-term solution is necessary because the cooperative’s current financial and technical realities make it increasingly difficult to meet its obligations and fund the improvements demanded by member-consumers.

The proposal includes assurances on continuity of employment and the protection of employee benefits, including retirement-related entitlements, subject to the final agreement and applicable laws and regulations.

The CJVA remains subject to the required qualified-majority approvals and to the decision of more than 226,000 active member-consumers through a plebiscite scheduled on the remaining weekends of September.

For the cooperative’s member-consumers, employees, and the communities it serves, the outcome could shape the future of electricity reliability, infrastructure development, and the viability of SOCOTECO II itself.