ERC okays P1.082-B capex for Paleco

By Lenie Lectura – January 7, 2019
from Business Mirror

The Energy Regulatory Commission (ERC) has approved a capital expenditure (capex) spending of P1.082 billion from 2017 to 2021 for beleaguered Palawan Electric Cooperative (Paleco).

The amount is lower than Paleco’s application of P1.161 billion, intended for spending for  29 proposed projects. Only four projects were disapproved by the ERC.

“The application filed by Paleco for approval of its capital projects for the years 2017 to 2021 and for authority to secure loan, with prayer for provisional authority, is hereby resolved,” the ERC said in its November 6 decision, which was posted only last month.

The ERC authorized Paleco to secure a P263.70-million loan to finance its capex.

“Based on Paleco’s application, its average annual capex is approximately P129 million. Based on the simulation conducted by the Commission, Paleco must require an approximate loan of P295 million to maintain a revolving fund of approximately P38.7 million by the end of the implementation period.  However, Paleco proposed a lower loan amount of P263,708,768.67. Therefore, the Commission approved the authority to secure a loan by Paleco in the amount of P263,708,768.67, as proposed,” the ERC said.

Paleco intended to avail itself of the loans from the National Electrification Administration (NEA)  to finance several of its proposed capex projects. The proposed loan amount is payable within 15 years with an annual interest rate of 6 percent.

Paleco  expressed concern about NEA’s move to appoint an acting general manager to oversee the power utility’s operations.

NEA  Administrator Edgardo Masongsong earlier designated engineer Nelson Lalas as Project Supervisor and Acting General Manager of Paleco. Lalas was tasked to manage the day-to-day operations of Paleco and to ensure the efficient delivery of electric service to its member-consumer-owners (MCOs).

“Despite its status as an electric cooperative registered with the Cooperative Development Authority, the NEA will not stand idly by. We will exercise the agency’s inherent jurisdiction over Paleco, as it has the technical capability to turn things around in Palawan and for Palawan member-consumer-owners,” Masongsong said.

This was after President Duterte last November 10 expressed his disappointment over the worsening power-supply problem in Palawan, and warned Paleco of government takeover if frequent service interruptions in the province were not solved by the end of the year.

In its position paper, Paleco outlined a range of issues in providing reliable electricity service to its MCOs, which include the delay in the approval of its capex application by the ERC. Paleco is proposing to install substations in strategic places in Puerto Princesa City and in the southern part of Palawan, as well as to put up a Supervisory Control and Data Acquisition System in a bid to improve its power-supply reliability in the province.

Another concern of Paleco was the construction of transmission lines of the National Power Corp. and upgrading its substations to augment its existing capacities.

Paleco also cited delays in the processing and issuance of necessary permits like the environmental compliance certificates, and electrical permits from the local government.

Also, it blamed the road-widening projects of the Department of Public Works and Highways. Paleco’s operations were greatly affected due to the need for the relocation of affected poles, which in turn resulted into a series of power interruptions.

Moreover, the local power utility also sought the national government’s assistance to get Palawan’s rightful share in the Malampaya project to accelerate the electrification projects in the province.

Paleco is the lone power distributor of Puerto Princesa City and 18 municipalities, serving 137,277 consumers as of June 2018.