Latest on the IMC: (Is Meralco-Comstech backing out?) PDF Print E-mail
Monday, 25 June 2018 14:25

By LIZA JOCSON

Is Meralco subsidiary Comstech backing out from entering into an Investment Management Contract  (IMC) with the Zamboanga City Electric Cooperative (ZAMCELCO)?

This is the question which local power industry players are asking after reports circulated late last week that Comstech management are planning to withdraw.

The report was circulated amid strong criticisms against Zamcelco on social media about recurring power outages in most parts of the city.

The National Electrification Administration (NEA) has reportedly called a meeting today between the two power players in an effort to resolve issues that could lead to the collapse of the deal.

Local power industry sources said that Meralco-Comstech higher-ups are having doubts on being able to turn around the ailing cooperative (Zamcelco) due to its huge systems losses.

At present, Zamcelco’s systems loss has reached 18%, five percent over the 13% allowable limit by the Energy Regulatory Commission (ERC).

Early this year, the ERC has issued a new policy further decreasing the allowable systems loss for cooperatives in the country.

The ERC prescribed an initial systems loss figure at 12% for 2018 until it reaches 8.5% in the year 2022.

Sources said that Comstech is having serious doubts on being able to resolve the systems loss problem given the current state of Zamcelco.

Last May, the proposed IMC had been sent to Meralco-Comstech for the approval of the contract.

Zamcelco Board members were expecting that the contract will be delivered back promptly to Zamboanga for the formal signing ceremony since issues had reportedly been threshed out during months of negotiations.

The review of the contract, however, took at least two months until feelers were sent by Meralco-Comstech on the possibility of withdrawing from the deal.

Recall that Meralco-Comstech and Aboitiz Power Ventures had participated in the bidding for the proposed IMC in December 2016.

Bidding for the proposed IMC had been postponed at least twice after the two bidders asked for more time to conduct due diligence on Zamcelco’s financial situation.

In April 2017, a failure of bidding was declared after the two bidders failed to submit their bids.

Among these issues are the Zamcelco debt which has reportedly reached a billion pesos, its huge systems loss, and the cooperative’s purchase of the 16mw generator set despite the current stable power supply.

in November 2017, Aboitiz Power Ventures decided to withdraw from the bidding, thus leaving Meralco-Comstech as the lone entity to vie for the IMC.

Zamcelco reportedly agreed to revise its terms of reference for the IMC to accommodate some suggestions made by Meralco-Comstech on the contract.

The IMC had been envisioned by Zamboanga as a much-awaited solution for the poor electricity service in Zamboanga City. (L. Jocson)