MALAYBALAY CITY (MindaNews/20 February) – A P135.901-million financing agreement signed this month between the Bukidnon Second Electric Cooperative (Buseco), Bank of the Philippine Islands (BPI) and the LGU Guarantee Corp. (LGUGC) to improve the power firm’s services has met objections from the provincial board of Bukidnon.
In a resolution sponsored by Board Member Nemesio Beltran, Jr. and unanimously approved on Wednesday, the provincial board asked the National Electrification Administration (NEA) not to approve loan applications by either of Bukidnon’s two power cooperatives without the board’s endorsement.
“It is no secret that that the general welfare of the inhabitants of Bukidnon would be affected every time a loan is incurred by the electric cooperatives because the payments of said loan would almost always be passed on to their consumers,” the resolution said.
Beltran said the board has passed a resolution disallowing increases in power rates by the First Bukidnon Electric Cooperative (Fibeco) and Buseco without their approval.
The board members argued that as the “appointed guardian of the general welfare of the inhabitants of the Province of Bukidnon, it is only but fitting and proper that due courtesy be accorded to its Sangguniang Panlalawigan by not approving any loan application of Fibeco and Buseco without the prior favorable endorsement of the highest lawmaking body of Bukidnon.”
The provincial board has summoned the officers of Buseco to explain why they should not be censured in relation to the loan.
The move was prompted by the reported approval earlier this month of a US$12-million financial support to Buseco which is guaranteed by the partial credit guarantee program under the Electric Cooperative System Loss Reduction Project financed by the Global Environment Facility (GEF), a fund administered by the WB.
MindaNews is yet to reach Buseco for comments on the issue.
But according to the World Bank in a statement posted on its website, Buseco will use the amount for the installation of a 10-MVA substation in Barangay Kisolon in Sumilao town, construction of a 25-kilometer 69-KV transmission line from Lunocan to Kisolon, and replacement and calibration of installed meters.
Edgardo Masongsong, Buseco general manager, was quoted in the statement as saying that with improved capacity, “Buseco will be able to bring better electricity services to 86,000 rural homes in 170 barangays in Bukidnon as well as meet the increasing power demand by small and medium agribusiness enterprises, thus contributing to the expansion of economic opportunities and job creation in the countryside.”
The WB announced that BPI’s support to Buseco is the fourth of its kind to have been made under the partial guarantee program. Over a dozen more for several other electric cooperatives are under preparation, it added.
“The partial credit guarantees program covers up to 80 percent of the total amount of financing made by commercial lenders such as BPI, one of eleven accredited financial institutions in the program, to electric cooperatives,” the WB said.
This credit enhancement, it added, is critical because rural electric cooperatives have been perceived as “poor credit risks” and, as a result, little commercial credit has flowed to the sector.
By guaranteeing a portion of commercial banks’ exposure, the partial credit guarantee helps lower borrowing cost while enhancing commercial discipline among electric cooperatives, the WB said.
Buseco covers the northern part of Bukidnon province, particularly the city of Malaybalay and the municipalities of Baungon, Malitbog, Libona, Manolo Fortich, Sumilao, Impasug-ong, Lantapan, Cabanglasan and Talakag. (Walter I. Balane/MindaNews)