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NEA Board approves the adoption of options for ailing ECs

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Ailing ECs are categorized into curable and incurable.  Curable ailing ECs are those which have a chance to turn-around based on financial, technical and institutional efficiency, while incurable ailing ECs are those whose recovery is impossible.

A simulation of the parameters will be made on all ECs and all affected ECs will be informed that they are part of the group considered as Ailing ECs. They will be provided with a period of 30 to 90 days to submit a Recovery Plan including a Performance Commitment Contract for approval of NEA.   After which, a monthly assessment will be made to validate the performance of the ECs.  An EC which continues to deteriorate in performance during the 180 day period will be a candidate for immediate application of the options for incurable ECs.

Options for incurable ECs include Extra-judicial Foreclosure (Sec 5 of PD 1645 in relation to Sec 35-37 of PD 269), Private Sector Participation - which can be a Joint Venture, Investment Management Contract, Management Contract, Operations and Maintenance Contract, Special Equipment and Materials Lease Agreement or Concession - and Insolvency (Voluntary/Involuntary).  Another option would be the possibility of turn-over of EC to Local Government Unit (LGU).

Meanwhile, if operations improvement is evident, the EC will be given another 90 to 180 days to fully recover through a new Performance Commitment Contract/ Work Program.

“The options for ailing ECs, as approved by the NEA Board of Administrators on May 20, 2011, is one concrete step of NEA which shows our continuous effort to think of ways in helping the electric cooperatives.  We are optimistic that with a definite action plan in place, we will be able to immediately enforce the applicable option and measures to assist an EC”, said Administrator Edita S. Bueno.

The adoption of option for ailing ECs was published in The Manila times on August 18 and 19, 2011, in the UP Law Center on August 18, 2011 and republished in The Philippine STAR on September 5, 2011.  It is deemed effective fifteen days after its publication in a newspaper of general circulation.