Will Aleco never get out of its mess? (2)

Proposals

To institute organizational change, four proposals are being advanced – a shift to a coop registered with the Cooperative Development Authority (CDA), a move towards privatization, a coop managed by an investment management contractor (IMC), or an enterprise run by the government.

Photo Courtesy of aleco.com.ph

The primary proponents of the shift to a CDA-registered cooperative are the Albay Consumers Watch (ACW) and a faction of the Aleco Employees Union (ALEU). They argue that if Aleco will become a “true consumers’ cooperative”, performance will become better as the consumers themselves, being the primary stakeholders, will have the final say on how to solve the EC’s problems.

But while CDA-registered electric coops like the Palawan Electric Cooperative (PALECO) provides a promise being a good performer, the case is otherwise with the Sorsogon Electric Cooperative II (SORECO-2). Because of the gray areas in laws involving electric coops under CDA, Soreco-2 finds it hard getting technical and financial support from the NEA. The shift also produced unforeseen effects that rattled the coop’s organizational stability hence resulting to low credit ratings, unsustained distribution of dividends or shares to its members-consumers, and poor performance. As of 2009, it was reported that Soreco-2 incurred a debt of P100 million, a systems loss which ranges from 18% to 27%, and a collection rate between 77% and 91%.

While nobody is disputing the palatability of Aleco’s conversion to a CDA-registered cooperative, issues are raised on the aspect of feasibility. In 2003, the consulting team organized with the help of Bishop Sorra, for instance, revealed that if Aleco will be converted to a stock coop, its members-consumers will bear the brunt of Aleco’s debts – something which cannot be done because majority of them are poor. It can also be added the physical impossibility of gathering at least 25% of the members-consumers in one place in a single meeting, and asking them to vote on the issue of conversion – an obstacle in Casureco II’s conversion bid.

Because of the issue of feasibility, some consumers from the business sector along with residents who experienced privately-managed electric companies like Meralco, are pushing for Aleco’s privatization or conversion to a stock corporation. This, however, is being opposed for fears of unregulated increase in electricity rates, the alleged lack of consumer voice in the general operations of the EC, and the fear of security of tenure on the part of the employees. The same arguments are also being raised against entrusting Aleco to an IMC.

It is hard to say whether or not these reasons and fears are based on solid ground considering that IMCs are based on contracts and that the contracts determine what will happen. What is certain is that the oppositors to IMCs are not confident on who will choose the IMC and what details the contracts should have. It can also be added that these interest groups are not yet aware that IMCs, if not politicized, will work also. An example is the Bohol Electric Cooperative I which is the IMC of Boheco 2. The latter was performing badly but with the IMC with the former, it experienced a performance turnaround and was even awarded as an EC with the greatest improvement.

But of course, it should be stressed that the IMCs exist for profit and when business and politics collide, the result may become negative depending on where the viewer stands. An example is the experience of Casureco IV and Salcon which, at present, is a subject of a legal controversy. Casureco IV and Salcon are accusing each other of failing to comply with the terms of the contract and as such, contracting out the management of the former was discontinued.

The last, and partly based on the state-intervention frame, is to let Aleco be under the full control of the government. Unknown to most, this was already applied when most electric coops were managed by the government during the Marcos period. But because of the lack of competent managers, and because government-run corporations are being looked-up to as a source of perks, these did not succeed. Even Bohol Lights which was run by the Provincial Electrification Service failed forcing the provincial government of Bohol to open a bid for a Rehabilitate-Own-Operate-Maintain and Manage Scheme (ROOMM) in December 1999.

(To be continued…)

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One thought on “Will Aleco never get out of its mess? (2)

  1. Pingback: Will ALECO never get out of its mess? « Bik-Lish

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