The Option to Privatize Electric Cooperatives

By Herbert Vego

THE Minimal Government Thinkers, a non-government organization batting for a limited role of government in society, has criticized the National Electrification Administration (NEA) as a “wasteful agency” which has propped up inefficient electric cooperatives (ECs) through billions of pesos in taxpayer-funded subsidies and loans.

According to the Institute of Contemporary Economics, between the years 2022 and 2024, the ECs in Panay and Guimaras invested only ₱2.38 billion of the ₱10.52 billion allocated by NEA for capital expenditures. This underinvestment, with only 3.1% to 3.7% of total spending on infrastructure development, has prevented them from filling the growing public demand for sufficient energy.

That reminds me of the how the Central Negros Electric Cooperative (Ceneco) ended up in a takeover by the Negros Electric and Power Corporation (NEPC) in August, 2024 through a joint venture agreement with the Negros Electric and Power Corporation (NEPC).

Negros Electric and Power Corp. (NEPC) is a sister company of the Iloilo City-based MORE Electric and Power Corp. (MORE Power) under Primelectric Holdings, with Roel Z., Castro as president and chief executive officer.

Primelectric, owned by billionaire Enrique K. Razon, has also assumed a 70 percent stake of Bohol Light Co. Inc.

Without the aforementioned joint venture, Ceneco could have gone bankrupt, having accumulated around ₱613 million in loans from NEA and several banks.

CENECO was already losing P20 to P30 million a month.

“You look at it as a problem, I look at it as an opportunity,” NEPC’s President Castro said in an interview with a Manila-based daily.

A power consumers group here, Power Watch, recently commended NEPC’s takeover of Ceneco for “driving economic growth and development in the Negros Island Region.”

Ceneco was just one of the many ECs that had cost the government billions of pesos of taxpayers’ money. But there seems to be no end in sight to their capital needs on the pretext of boosting power infrastructure.

A news report recently focused on a meeting between NEA administrator Antonio Mariano Almeda and officials of the Asian Development Bank to explore new funding for hard-up electric cooperatives.

As reported, “In 2024, NEA issued around ₱1.8 billion in loans to 36 ECs—up from ₱1 billion the year before. Most of the funds, nearly ₱1.2 billion, went to capital projects across over 20 provinces, aiming to upgrade regional power infrastructure.”

However, by NEA’s own admission, several ECs have willfully committed irregularities. For example, early in 2024, the agency removed all nine board members of the Negros Occidental Electric Cooperative (NOCECO), and suspended its general manager for approving unauthorized salary increases and retirement payouts.

NEA also sacked 14 NOCECO officers for improper disbursements of funds, leading to their removal and disqualification from holding future roles within the cooperative.

So, does the persistent inefficiency of ECs justify the cost to taxpayers?

I don’t think so. By draining public funds that could have funded viable projects – as in tourism that attracts big foreign spenders to our pristine beaches, resorts and natural attractions – these ECs are a liability to both the government and our people.

Private owners of tourism-oriented establishments complain of poor occupancy due to expensive but unreliable electricity supply.

Needless to say, power instability issues have led to business closures and job losses.

According to the Department of Tourism (DOT), tourism revenues reached ₱760.5 billion in 2024. But it’s small when compared to those of our Southeast Asian neighbors. Thailand, to cite one, registered revenues of around 1.6 trillion Thai baht.  One baht equals ₱1.70.

One wonders why electric cooperatives charge different rates.  As of today, the Iloilo-1 Electric Cooperative (ILECO 1) charges ₱14 (rounded off) per kilowatt-hour while ILECO 2 charges ₱13/kWh.

In Iloilo City, MORE Power – a private distribution utility, to reiterate – has just announced its reduced rate for this month at ₱11/kWh.

With its expansion of coverage to Passi City and 15 towns of Iloilo, the company hopes to lower its rates further by the magic of the economies of scale or cost benefits arising from producing more goods and services in larger numbers.

Thus, I believe that the transformation of inefficient ECs into regulated private corporations should be the battle cry of their own customers. This is because a stable private utility has the capacity to invest “unli” – as shown by MORE Power, which in five years has invested around ₱2.5 billion in pursuit of a stable and modern electricity system.