RP’s Oldest Power Coop Saddled with Huge Debts, Mismanagement

According to workers, the failure of the cooperative to solve its troubles might pave the way for its privatization, which could mean higher electric rates for consumers in the provinces of Davao del Norte and Compostela Valley and the possible loss of job of its workers.

By Gilbert Pacificar and Jetty Ayop-Ohaylan
Bulatlat Mindanao Bureau

TAGUM CITY – The Philippines’ oldest electric cooperative is saddled with huge debts, mismanagement and possible corruption – problems that are affecting its service and putting at risk the employment of its workers.

According to workers, the failure of the cooperative – Davao del Norte Electric Cooperative (Daneco) - to solve its troubles might pave the way for its privatization, which could mean higher electric rates for consumers in the provinces of Davao del Norte and Compostela Valley and the possible loss of job of its workers.

For years, Aboitiz Power Corporation, one of the country’s largest power distributors, has been trying to take over Daneco and has been waiting on the wings, watching the woes of the cooperative unravel. Supporters of the workers say Aboitiz will end up benefiting from Daneco’s problems.

Daneco’s workers have accused their manager of alleged irregularities, among them that it has been mismanaged and has been losing money for years.

A financial report showed by some employees to Bulatlat show that by November 2004, Daneco was losing P19 million.

“Despite its big coverage and monopoly operation, Daneco cannot pay its bills to the National Power Corporation,” said Florante Astillo, president of the United Daneco Employees Workers Association (Udewa).

Facing bankruptcy

In order to operate, Astillo said, the management had to borrow money from Daneco’s “restricted” funds. “In truth, Daneco is facing bankruptcy,” Astillo said.

The workers, through Udewa, accused the manager, Edgardo Savellano, of committing grave abuse of authority, dishonesty, technical malversation of funds and breach of contract and agreement.

The workers said irregularities marred the bidding and awarding of the contract for a gym, the acquisition of software, and the use of the cooperative’s restricted funds as well as subsidy funds from the National Electrification Administration (NEA).

Astillo said their complaints have been supported by the NEA’s own audit of Daneco last year.

Udewa brought their complaints to the board of directors, which ruled that Savellano would be put on preventive suspension while the charges are being investigated. During the board’s meeting on Jan. 22, at least 20 members of Udewa, wearing black shirt, picketed inside the Daneco compound. Outside the compound, some 100 consumers and members of the Kilusang Mayo Uno also participated in the protest.

But the board’s decision was not approved by the NEA in Manila, which had been approached by the employees to investigate the allegations against Savellano.

Employees told Bulatlat that what NEA did was send personnel to Daneco two weeks ago not to implement the board’s ruling but to mediate a possible reconciliation between Savellano and the workers.

No reconciliation took place, however, while the “project supervisor” that Daneco promised to provide had not yet arrived. NEA oversees the operations of the various public electric utilities across the country.

The workers believe that NEA’s efforts to “reconcile” them with Savellano is a form of political intervention.

Charges

Workers told Bulatlat that irregularities surrounded the construction of a gym for Daneco workers in Montevista, one of the towns in Compostela Valley province. According to them, Daneco paid a construction company, ESBE Industrial Builders and Contractors Corp., more than P300,000 for the gym, and that it was covered by a memorandum of agreement between ESBE and Daneco.

But Bernie Sabido, general manager of ESBE, denied that it transacted with Daneco on the gym project. “Our office does not have any knowledge that there was a memorandum of agreement between ESBE-IBCC and Daneco being executed for whatever purpose,” Sabido said in a letter dated Nov. 5 last year.

Savellano’s biggest sin, the workers said, was the alleged misuse of Daneco’s restricted funds, such as money collected from consumers as deposits for meters and the like, and the NEA’s subsidy funds as well as countrywide development fund (CDF).

When the National Transmission Corp. billed Daneco with nearly P18 million a few years ago, the cooperative, with the approval of the board, dipped into these restricted funds, on the condition that Daneco would pay these funds gradually.

An audit by the NEA found Daneco management culpable for violating a memorandum of agreement between Daneco and NEA that says restricted funds can only be used for materials and equipment, with the approval of the NEA. The NEA rule specifically prohibits using these monies for payment of power bills.

Liquidity problems

On top of all this, Daneco has arrears with the National Power Corp. amounting to P23.5 million as a result of an erroneous meter reading.

As a result of these problems, according to the employees, Daneco’s services have suffered, while consumer’s complaints have not been solved.

Daneco, created in 1971, covers 15 towns and two cities of Davao del Norte and Compostela Valley. Its mandate is to provide power supply to consumers, even in far-flung barangays. Its 11 sub-stations have a capacity of 78.66 megawatts.

Bulatlat tried to talk to Savellano about the charges against him but he was not available; his colleagues at Daneco refused to give his phone number.

But in an interview with the local paper Ang Mantalaan, Savellano defended himself, saying the suspension order against him was illegal because it was not approved by the NEA. He said he would bring the matter to the courts.

Privatization

Daneco’s workers are worried that the cooperative’s troubles might end up in the privatization of the electric utility. That could mean loss of job for them.

Romualdo Basilio, a leader of the Kilusang Mayo Uno in the province, said Daneco’s workers had sought the union’s help. Basilio believes that Daneco is headed for privatization. He said it is only a matter of time before Daneco declares bankruptcy and for privatization to begin.

This, he said, would mean more power rates for consumers in Daneco’s area of coverage. Basilio said Aboitiz Power Corp., one of the country’s largest electric utilities, has been trying to take over Daneco, even before the Power Reform Act was passed. The law allows the privatization of public power utilities such as Daneco. Bulatlat

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