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Wednesday, April 17, 2024

SMC rescues debt-saddled Albay Electric Cooperative

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San Miguel Global Power Holdings Corp., the power generation arm of San Miguel Corp., said Thursday it had come to the rescue of debt-saddled Albay Electric Cooperative and assured the province of continuous power supply for the next 12 months.

SMC, through subsidiary Masinloc Power Partners Co. Ltd. which is the owner and operator of the 1,000-megawatt Masinloc power plant, agreed to supply ALECO’s full power requirements for 12 months following a series of discussions.

The National Electrification Administration sought the help of SMC president Ramon Ang to prevent ALECO’s imminent disconnection from the grid following a failure to secure emergency power supply contracts with other firms due to the cooperative’s credit issues.

The Independent Electricity Market Operator of the Philippines, the operator of the Wholesale Electricity Spot Market, raised concerns over recent massive power purchases made by ALECO. IEMOP was seeking credit support for ALECO’s purchases in view of its historical credit standing.

SMCGP said the supply agreement would enable ALECO to prevent any further credit concerns with IEMOP, which could compromise energy security in the area.

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“This power supply agreement is not for-profit, and is primarily in consideration of the welfare of the people of Albay, who would have otherwise been disconnected from the grid. While SMGP has pending legal issues with ALECO, which we are pursuing, we are still very much concerned about the welfare of the people of Albay,” said Ang.

Ang thanked NEA administrator Antonio Mariano Almeda, who stepped in to help address the critical concern of power users in the province and “all stakeholders have now come together to find a workable solution.”

Almeda expressed gratitude to SMC for agreeing to come to ALECO’s rescue by committing to provides its power supply for the next year. He also recognized the Department of Energy for its support of the agreement.

“Since we became involved, our goal was always to ensure continuous power supply to ALECO customers, despite the cooperative’s troubles. While no emergency power contracts could be finalized with the other generation firms, SMC and RSA did not hesitate to help when we approached them,” Almeda said.

“We will continue to work with all stakeholders to help make this supply agreement work for the benefit of consumers,” he said.

Ang gave NEA and the DOE full assurance of SMCGP’s support in providing the entire power requirements of those in ALECO’s franchise area. SMCGP, NEA and ALECO signed the emergency power supply agreement on Dec. 29 at the SMCGP head office despite ALECO’s pending legal issues with another SMCGP firm, Albay Power Energy Corp., which includes unpaid claims and advances amounting to P5 billion related to their earlier terminated concession agreement.

ALECO sought the intervention of the NEA following the termination, which took over the distribution business of ALECO in a fiduciary capacity as allowed under its charter. The NEA has been primarily focused on ensuring the continuous supply of power over the ALECO franchise area.

The SMCGP management said its support to provide uninterrupted power to ALECO’s franchise area is without prejudice to its rights under the concession agreement.

SMCGP also said the applicable tariff rate under the power supply agreement is competitively priced, based on the prevailing conditions in the fuel commodities markets and the credit standing of ALECO.

The EPSA is subject to ERC approval, which will be secured by the parties, with the full support of NEA and the DOE.

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