(Ed’s Note: Privilege speech of the Honorable Franklin L. Quimpo, SP member, province of Aklan delivered during the 37th regular session of the SP Aklan, Kalibo, Aklan on October 12, 2005.
AKELCO, A+: Truth Or Myth
Much hype has been made of AKELCO’s awards and categorization as an “A” plus electric cooperative, but is it? Do the consumers have reason to be happy about this development, or, were they deceived into believing said claim? Let us look closely at AKELCO’s financial report.
Available data obtained from the cooperative of its financial condition from the year 2001 to 2004, showed that it incurred substantial losses during the said period. Its accumulated losses now stand at P253.5 million as of 2004 as revealed in its 2003-2004 statement of financial condition under the “unapropriated margin deficit” account. The most dramatic increase was made in the year 2003 when its losses jumped to P243 million from the P97 million, or, a 150 percent increase. As data of prior years are not available, it can be safely assumed that AKELCO has consistently suffered financial losses since its inception and will continue to suffer the same fate as in previous years.
Why then does AKELCO still exist despite the financial losses it has incurred over the years? Again, its statement of financial condition will reveal that it has survived by obtaining loans from the National Electrification Administration (NEA) and other financial institutions to finance its day-to-day operations. Let us cite few examples as reflected in its financial statements:
1. Its current long – term debt (2004) now stands at Php277,564,152. By their own admission, these loans were obtained from NEA and were used for various expansion projects or maintenance of its assets.
2. Accounts Payables – in November and December of 2004, AKELCO had unpaid billings of Php32.784 million to NPC. The amount due to NPC was restructured through AKELCO’s loan application under NEA’s modified relending loan to “offset its overdue power accounts from NEA’s receivables from NPC. The amount will be paid in equal quarterly installments starting March 2005 until March 2008. Here, AKELCO had to borrow money from NEA to pay its power account with NPC to maintain its credit worthiness.
In another instance, the amount of PHP51,779,916.19 was reflected as “Accounts Payables-Others” in 2004. According to AKELCO, this amount was incurred due to its availment of credit terms from its different suppliers and for the “unremitted universal charge for the missionary electrification and environmental charge in the amount of Php 0.373 and Php 0.0025 per kilowatt hour sold charge to consumers to be remitted to the power sector assets and liabilities management corporation (Psalm) pursuant to Energy Regulatory Commission Order Case No. 2002-165.
In the aforementioned case, while the universal charge for the missionary electrification and environmental charge was collected from its consumer-members, yet it was not turned over or remitted to psalm. Why? Is it because AKELCO does not have enough funds generated from its operating revenues to pay its financial obligations? Again, AKELCO appropriated the money that was to be remitted to psalm and spent it for whatever purpose. Only they know. Just the same, this amount has to be paid to psalm and will remain in the books of the cooperative until fully paid. Are they going to apply this as loan from NEA? Again, only they know.
On the whole, AKELCO has a whooping Php129,464,767.37 notes and accounts payable as of 2004. Where and how to pay these (AKELCO) financial obligations? The most probable and logical answer would be to borrow some more adding to its already bloated interest charges/payments to NEA.
Thus, if we examine closely the statement of operations for the years 2003 and 2004, the amount of interest payment alone exceeds operating margin.
This means that AKELCO’s operating revenues are not even enough to pay interest for its loans. Quo vadis AKELCO?
Among other accounts that showed very significant figures are the administrative and general expenses and consumers accounts expenses amounting to Php52,776,552 million and Php25,375,254 million, respectively, for the year 2004. The former are lump sum amounts and should be unbundled to be able to analyze and understand it. The later account is very mysterious and needs to be unbundled too.
While AKELCO management team can always blame power sources and transmission facilities for the frequent power outages and power shedding in the AKELCO serviced area, the almost daily power failures only spells the inefficiency of the rural electric cooperative still under NEA’s management team.
Until now, AKELCO has failed to establish its genuine legal identity. While it continues to use the term “cooperative” it has not exerted serious efforts to be registered under the ambit of the Cooperative Code of the Philippines through the Cooperative Development Authority. Failing to register with the CDA, and remained as such until now, under the law, this power distribution firm is barred from attaching the word “cooperative” from its name because it has opted to remain under the full supervision of NEA.
Premises considered, may I move that this Provincial Legislative Body invites the presence of the competent representatives of the Board of Directors and the Management Team of AKELCO to appear before one of the sessions of the Sangguniang Panlalawigan (of Aklan) to answer clarificatory questions about the state of the operations of the rural electric cooperative so that this august body maybe guided within its legislative jurisdiction in taking appropriate actions on matters relating to the power sector in this province. /MP mailto:madyaas_pen@yahoo.com
AKELCO, A+: Truth Or Myth
Much hype has been made of AKELCO’s awards and categorization as an “A” plus electric cooperative, but is it? Do the consumers have reason to be happy about this development, or, were they deceived into believing said claim? Let us look closely at AKELCO’s financial report.
Available data obtained from the cooperative of its financial condition from the year 2001 to 2004, showed that it incurred substantial losses during the said period. Its accumulated losses now stand at P253.5 million as of 2004 as revealed in its 2003-2004 statement of financial condition under the “unapropriated margin deficit” account. The most dramatic increase was made in the year 2003 when its losses jumped to P243 million from the P97 million, or, a 150 percent increase. As data of prior years are not available, it can be safely assumed that AKELCO has consistently suffered financial losses since its inception and will continue to suffer the same fate as in previous years.
Why then does AKELCO still exist despite the financial losses it has incurred over the years? Again, its statement of financial condition will reveal that it has survived by obtaining loans from the National Electrification Administration (NEA) and other financial institutions to finance its day-to-day operations. Let us cite few examples as reflected in its financial statements:
1. Its current long – term debt (2004) now stands at Php277,564,152. By their own admission, these loans were obtained from NEA and were used for various expansion projects or maintenance of its assets.
2. Accounts Payables – in November and December of 2004, AKELCO had unpaid billings of Php32.784 million to NPC. The amount due to NPC was restructured through AKELCO’s loan application under NEA’s modified relending loan to “offset its overdue power accounts from NEA’s receivables from NPC. The amount will be paid in equal quarterly installments starting March 2005 until March 2008. Here, AKELCO had to borrow money from NEA to pay its power account with NPC to maintain its credit worthiness.
In another instance, the amount of PHP51,779,916.19 was reflected as “Accounts Payables-Others” in 2004. According to AKELCO, this amount was incurred due to its availment of credit terms from its different suppliers and for the “unremitted universal charge for the missionary electrification and environmental charge in the amount of Php 0.373 and Php 0.0025 per kilowatt hour sold charge to consumers to be remitted to the power sector assets and liabilities management corporation (Psalm) pursuant to Energy Regulatory Commission Order Case No. 2002-165.
In the aforementioned case, while the universal charge for the missionary electrification and environmental charge was collected from its consumer-members, yet it was not turned over or remitted to psalm. Why? Is it because AKELCO does not have enough funds generated from its operating revenues to pay its financial obligations? Again, AKELCO appropriated the money that was to be remitted to psalm and spent it for whatever purpose. Only they know. Just the same, this amount has to be paid to psalm and will remain in the books of the cooperative until fully paid. Are they going to apply this as loan from NEA? Again, only they know.
On the whole, AKELCO has a whooping Php129,464,767.37 notes and accounts payable as of 2004. Where and how to pay these (AKELCO) financial obligations? The most probable and logical answer would be to borrow some more adding to its already bloated interest charges/payments to NEA.
Thus, if we examine closely the statement of operations for the years 2003 and 2004, the amount of interest payment alone exceeds operating margin.
This means that AKELCO’s operating revenues are not even enough to pay interest for its loans. Quo vadis AKELCO?
Among other accounts that showed very significant figures are the administrative and general expenses and consumers accounts expenses amounting to Php52,776,552 million and Php25,375,254 million, respectively, for the year 2004. The former are lump sum amounts and should be unbundled to be able to analyze and understand it. The later account is very mysterious and needs to be unbundled too.
While AKELCO management team can always blame power sources and transmission facilities for the frequent power outages and power shedding in the AKELCO serviced area, the almost daily power failures only spells the inefficiency of the rural electric cooperative still under NEA’s management team.
Until now, AKELCO has failed to establish its genuine legal identity. While it continues to use the term “cooperative” it has not exerted serious efforts to be registered under the ambit of the Cooperative Code of the Philippines through the Cooperative Development Authority. Failing to register with the CDA, and remained as such until now, under the law, this power distribution firm is barred from attaching the word “cooperative” from its name because it has opted to remain under the full supervision of NEA.
Premises considered, may I move that this Provincial Legislative Body invites the presence of the competent representatives of the Board of Directors and the Management Team of AKELCO to appear before one of the sessions of the Sangguniang Panlalawigan (of Aklan) to answer clarificatory questions about the state of the operations of the rural electric cooperative so that this august body maybe guided within its legislative jurisdiction in taking appropriate actions on matters relating to the power sector in this province. /MP mailto:madyaas_pen@yahoo.com
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