San Miguel to seal Albay retail power deal on Oct 29
MANILA, Philippines - The power unit of diversified conglomerate San Miguel Corporation will sign the agreement with Albay Electric Cooperative (Aleco) on Tuesday, October 29, an agreement to formalize their deal.
SMC Global Power Holdings Corporation is Aleco's white knight. The business group won the bid to take over the management of the debt-ridden power distributor for 35 years.
“The signing is merely a formality because SMC is already assessing what needs to be done in ALECO right now. This is more or less ceremonial,” Energy Secretary Carlos Jericho Petilla told reporters last week.
SMC Global Power will not own Aleco. It will only “run and shoulder the debt and pay monthly concession fees,” explained Petilla. Aleco’s debt exposure to SMC Global amounts to P600 million.
“At least P1 billion is needed to rehab or create a new organization for collection and systems improvement,” Albay governor Jeoy Salceda has said in early October.
Salceda has said Aleco is better off in the hands of the private sector. "Today, Aleco's system loss is 24% compared to the cap of 13%."
"What happened to Aleco is its failure to collect and failure to bill. There’s also the systems losses because the equipment was obsolete,” said Salceda.
He said the conglomerate is expected to generate revenues of about P600 million a year from taking over Aleco.
The Philippine Electricity Market Corporation, which operates the wholesale electricity spot market, earlier ordered Aleco to be disconnected from the grid for failure to settle its debts.
The disconnection resulted in province-wide blackout in Albay. Power was only restored upon the intervention of the Department of Energy, and after Aleco agreed to be taken over by the private sector.
San Miguel is the largest independent power generation company in the country with current installed capacity of 2,545 megawatts (MW).
The company had a 17% market share of the power supply of the national grid and 23% share of the Luzon grid as of end 2012.
It has previously sold its minority stake in Manila Electric Co. (Meralco), the country's biggest power distributor. - Rappler.com