The National Electrification Administration (NEA) was requested to furnish the city council a copy of the financial and management audit report on the loan of the Benguet Electric Cooperative, Inc. (BENECO) with the Development Bank of the Philippines (DBP) worth P160 million.
NEA BAC-Secretariat Chairperson Oswaldo Gabat informed the council that the NEA’s audit department is in the course of conducting the necessary financial and management audit after BENECO took out P160 million from its P300-M credit line to provide its equity share to the Rural Electric Finance Corporation (REFC).
REFC is a financing company owned by the electric cooperatives in the country.
Gabat clarified that BENECO’s act of obtaining a short-term loan from DBP, or any financial institution for that matter, is allowed and is in accordance with the NEA policy and with existing national laws and does not require the approval of NEA provided it met certain conditions. However, the act of investing with any company or corporation must go through the approval of NEA.
Gabat disclosed that BENECO’s P160-M investment with REFC was made without NEA’s knowledge and consent, stressing it violated the NEA policy. The electric company’s sanction for its violation will be dependent on the result of the audit, he said.
The NEA representative assured that a copy of the audit report will be given to the city council once completed.
Meanwhile, BENECO General Manager Melchor Licoben relayed to the council that the loan with DBP had already been settled after BENECO acquired a loan of the same amount from REFC.
“What BENECO did was some sort of financial engineering. The P160 million loaned from DBP which was infused to REFC was the same amount loaned from REFC inorder to pay its loan to DBP,” Licoben said
The BENECO general manager said the move which was approved by the company’s board proved to be advantageous because a portion of the interest earned by REFC goes back to BENECO in the form of dividends and it increases the capitalization of REFC allowing BENECO and other electric companies to sufficiently acquire a loan for their development projects from REFC and not from other financing companies.
The city council likewise requested BENECO to submit documents containing the details of the loan transaction.
Previously, the city council made the same request. However, the BENECO Board of Directors instead invited the members of the city council to their office to present and explain the circumstances regarding the P160-M loan.
Vice Mayor Faustino Olowan said the city council deserves to be properly appraised so the council can help inform the public about these issues.** Jordan G. Habbiling
