Will Aleco never get out of its mess? (3)

Aleco’s History

Will organizational change solve Aleco’s woes?

Organizational change is not a cure-all solution. Comparing the good and bad performing electric coops all over the country will point out the fact that some of the proposals above actually work but only on certain conditions. Hence, the best solution still lies on the basics: Understanding the root cause or causes of the problem and from there come up with solutions.

To be able to understand the roots of Aleco’s problem, it is necessary to go back to its history which is divided into five stages: the first consolidation stage (1915-1972); the deconsolidation stage (1972-1991); the reconsolidation stage (1991-2008); the NPC take-over; and the post-NPC takeover.

The first stage is simply the consolidation of the original Aleco which services the First District, Lealda and the Ligao Power Plant. The original Aleco was the youngest of the three and was acting as a public utility patterned after the rural electric cooperatives of the United States of America. It was performing well though its consumers are very small, mostly located in the urban areas of Tabaco, Malinao and Tiwi. The biggest was Lealda, a privately-managed public utility purchased from Juan Locsin Anson by Saturnino Benito before getting elected as Albay Governor. It was also performing well and servicing Legazpi, Albay District and Daraga – hence, the name Lealda – but was battered by tax cases which eventually caused it to fold down and taken over (some says, purchased) by the government. The third is the LPP which services Ligao and a few areas in the Third District. Like its successor, Aleco III, LPP was the poor performer of the three primarily because of consumer density along with other operation-related problems. By virtue of a policy on expanding rural electrification passed by then President Marcos, the three were merged in 1972.

Because there was no thorough study conducted in favor of the consolidation, the Aleco Board decided in 1982 to deconsolidate the electric coop into three. The reasons were mainly geographical and the difficulties in maintaining a single entity for the province. During those times, congressional district political divides were also increasing because control of the provincial government was almost monopolized by the Imperials of the Second District (see Past Governors of Bicol – Albay). This political situation also has a role to play in Aleco’s problems as will be discussed later.

When the deconsolidation was effected, Aleco I became an outstanding electric cooperative in the Philippines. Because of its “A+” ratings, it was considered a model all over the country and its electricians were even invited in the Middle East to give trainings on electrification provision. Aleco II also became a good performer while Aleco III remained at the sidelines. The aggregate systems loss of the three electric utilities also decreased.

But because Aleco III could not catch up with Aleco I and II, talks on consolidating Aleco was again revived. Among the frontrunners of the reconsolidation especially in 1990 was former Governor Jose Estevez, Sr., who was then very active in the Albay Chamber of Commerce. Other personalities include then Governor Romeo Salalima and the officials of the NEA. The reconsolidation was finally effected on March 26, 1991 and the consolidated Aleco was granted the sole franchise by the Philippine Government to operate an electric light and service in the Province of Albay until the year 2041.

History, it is oft said, repeats itself that the reconsolidated Aleco experienced again what happened from 1972 to 1982. Worse, because there is supposed to be lesser government intervention unlike before (which may be debatable in some sense), the performance of the reconsolidated Aleco plunged to all-time low and became considered as the worst performing EC in the country. Legal cases multiplied arising from labor and other operation-related issues, and financial troubles arose that by March 2008, Aleco’s outstanding obligation was P1.6 billion.

Because Aleco could not pay its debts, the National Power Corporation took over for a little over a year. But because the electric cooperative’s problems are deeply ingrained in the system and cannot be addressed in a short period of time, nothing happened except the halt of brownout threats. A few reforms were also instituted but these were not sustained so when NPC left Aleco, the same problems haunted the EC once again.

To date, Aleco is wallowing in P 2.3 billion debts, and a very high systems loss. This is despite the fact that Aleco is one of the electric coops with a very high distribution charge.

(Next: Lessons from Aleco’s history)

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