Sick Napocor takes in a patient

The sick trying to cure another sick.

This is probably the apt description when a management team from the state-owned National Power Corp. (Napocor) is poised to take over the operations of Albay Electric Cooperative (Aleco) as stipulated in the operations and management (O & M) contract agreed and signed by both Napocor and Aleco last July 17.

In addition to overseeing Aleco's administration, finance, management and support services, Napocor will also suspend the interest and penalty charges on Aleco's unpaid billings for the former for the duration of the one-year contract. This can however be extended by mutual agreement.

For its part, Aleco shall avail of National Power’s financial and technical expertise to achieve efficient, reliable and profitable management of its electrical distribution system for a service fee of two percent of the power purchased from the power generator during the contract period.

We have recently alluded to this dire situation of this cooperative when we referred to a sick power distributor in the Bicol area.

But can Napocor, by itself facing financial difficulties and is only kept alive by intravenous injection by the government, able to sustain Aleco?

The multilateral lender Asian Development Bank (ADB) recently suggested that the sale of Napocor itself is one of the best ways this government can improve the electricity prices of this country.

At the moment, Napocor's business is generation and transmission, but little of retail distribution, so it is doubtful whether it can stage a turnaround. Sure, the problems of Aleco is miniscule relative to Napocor's difficulty itself, but are quite different.

Aleco's problems are management-related, or the absence of it. Aleco probably exemplifies what an electricity distributor should not be.

For this type of service business, the management team should have a technical grasp of the requirements needed. It should not be beholden to the local political warlords. It should have strict internal controls on money and personnel matters.

It should have a professional management team.

We have been advocating all along to sell off these electric cooperatives, which are a relic of the bygone era of state monopoly, to entities such as experienced distribution companies. One could start with the cooperatives serving a large number of the populace. This has been successfully done in recent years as in the case of the San Fernando, Pampanga electric cooperative which has been sold to a private interest.

Napocor's takeover is not the best solution; it should only be temporary.

The consumers should have no fear of a private takeover, only relief. As it is, the electricity distribution industry is highly regulated and consumer protection is in place throughout the service chain from generation to transmission and distribution.

They could only gain freedom from incompetent administrators of many of these cooperatives.