During the Baguio City Council’s regular session on January 29, 2024, Councilor Fred Bagbagen asked probing questions of Benguet Electric Cooperative (BENECO) General Manager Melchor Licoben, Legal Counsel Delmar Carino, and Interim Board of Directors (BOD) Chairperson Steve Cating in hopes of shedding light on long-standing issues in the cooperative.
Bagbagen delved into the unliquidated cash advances of the former (Board of Directors) BOD members as revealed in three financial audits done by the National Electrification Administration (NEA) spanning 2014 to 2022. The city official said the acquisition of these unliquidated cash advances is a grave disservice to the electric cooperative’s member-consumer-owners.
Licoben and Carino explained that this matter is currently being addressed. Their initial step involved issuing demand letters to the concerned individuals, with further measures to be taken should these demand letters be disregarded.
Licoben emphasized that the BENECO management could not act on alleged unsettled cash advances that are covered by ongoing litigations. Details of these unsettled cash advances were withheld due to the rules of court.
Bagbagen also touched on the alleged car loans taken out by former BOD members, suggesting that these car loans were acquired through the credit line of BENECO. He casted doubt on the legitimacy of these loans as these directors were not regular employees of BENECO.
Licoben said these former directors involved had already been formally notified to settle their outstanding balances on their car loans. He disclosed that this had been highlighted in the latest NEA audit but assured the city officials that the restricted fund of the electric cooperative had not been used to pay such loans.
He added that monthly deductions from the salaries of regular employees are being carried out to contribute towards repaying the car loans taken out by the former directors.
Carino said the BENECO management would consider confiscating these vehicles acquired through loans as a potential corrective measure, following Bagbagen’s recommendation.
Furthermore, Bagbagen raised inquiries on the status of the Man-asok Mini-Hydro Power Plant.
Licoben said the power plant is already operational, however the BENECO management is in the process of completing documents required for its full commercial operation.
He said that the power generated by the power plant is already serving consumers in Buguias. However, the BENECO management cannot collect tariffs from the Department of Energy (DOE) due to the document completion process.
Interim BOD Chairperson Cating added that the energy produced by the power plant is being sold to the National Grid Corporation of the Philippines (NGCP), with the sales regarded as a deposit. He explained that, once a certificate of compliance is secured, the project can be commercialized to initiate the recovery of the investment.
The 2.3-megawatt power plant located in Buguias, Benguet has been funded through a 480-million credit line from the Development Bank of the Philippines (DBP). According to Licoben, an amount close to P325 million from the DBP credit line was drawn to actualize the project.
After the recovery period is completed, Licoben said all retroactive sales and subsequent sales revenue would be deposited into the coffers of BENECO.
He also said that one benefit derived from the operation of the Man-asok project is the substantial decrease in the energy purchases made by BENECO from NGCP resulting in cost reduction..
Meanwhile, Vice Mayor Faustino Olowan appealed to the BENECO management to perform their duties diligently to prevent the potential privatization of the electric cooperative, which could result in its take over by a private corporation.
Expiration of contract with Team Energy Phil. and the best way forward
In the same forum, Licoben disclosed the Competitive Selection Process (CSP), which is crucial for determining the next power supplier of BENECO after its contract with Team Energy Phil. expires this March 2024, was deemed unsuccessful due to the absence of participating bidders. Subsequently, all electric distribution utilities in the country were directed to consolidate and take part in a more wide-scale CSP conducted by the NEA,with an end view of promoting natural gas.The Terms of Reference for this new CSP have yet to be finalized by NEA.
Meanwhile, in anticipation of this CSP, BENECO solicited proposals from various energy suppliers through the Emergency Power Supply Agreements (EPSA). So far, one potential supplier submitted a firm offer. Should the agreement with the selected supplier materialize, it will be submitted to the Energy Regulatory Commission (ERC) for approval. In the event that the negotiation fails, Licoben assured the city officials that BENECO will secure its energy from the wholesale electricity spot market, ensuring uninterrupted power supply for the city.
Election of BOD members
During a meeting, members of the Interim Board of Directors passed a resolution scheduling the election of the regular members of the BOD within this year pending the approval of NEA. Cating said the latest possible date set for the election is September 29, 2024. After the election, the Interim Board of Directors will cease to exist. **Jordan G. Habbiling
