A BUDGET of P750 million may be “tight” for electric cooperatives seeking to restore services after calamities given the magnitude of the recent typhoons that visited the country, an official of the National Electrification Administration (NEA) said.
“The calamity loans extended by NEA in the past five years averaged P1.1 billion [yearly],” said Rossan Rosero-Lee, the agency’s deputy administrator in reaction to the proposed legislation that would set aside a “disaster management fund” for electric cooperatives.
Ms. Rosero-Lee made the assessment after typhoons Yolanda and Lawin hammered distribution utilities in the provinces in 2013 and 2016, respectively.
She said about 20 typhoons hit the country each year, based on data from the weather agency, most frequently transiting northern Luzon followed by Catanduanes and northern Samar.
Based on statistics from NEA, from 2007 to 2016, NEA extended financial assistance to electric cooperatives amounting to P6.75 billion, of which P5.2 billion are in the form of grants and P1.55 billion were calamity loans. The grants are outright assistance extended by the government while loans are to be repaid with interest.
Senator Sherwin T. Gatchalian is proposing that the government “shore up” the resiliency of the country’s electric cooperatives against natural calamities, which hit power structures including distribution and transmission lines.
Senate Bill No. 1253, or the Electric Cooperatives Disaster Management Fund Act, proposes putting up a P750-million fund to provide financial assistance to the cooperatives for the restoration and rehabilitation of damaged power facilities and infrastructure.
Mr. Gatchalian, who chairs the Senate energy committee and principal author of the bill, explained that without a dedicated funding source, electric cooperatives have no choice but to seek interest-bearing calamity loans from NEA.
The loans can take as long as two years to be converted into grants. The cooperatives, in the meantime, resort to borrowing from financial institutions to carry out their services. There are times when the loans are not converted because of budgetary constraints, resulting in financial distress for the non-stock, non-profit entities.
Calamity loans carry a 3.25% interest rate per annum and a repayment period of 10 years, but without exceeding the remaining franchise life of electric cooperative that avails of financing. — Victor V. Saulon
