The Energy Regulatory Commission (ERC) has approved National Electrification Administration’s P24-billion loan to Siaorgao Island’s power utility.
ERC, in a decision, gave NEA the go signal to lend out the said amount to Siargao Island Electric Cooperative Inc. (Siarelco).
“The loan to be secured by Siarelco from the NEA will redound to the benefit of its customers in terms of continuous, reliable and efficient power supply,” the ERC said.
A known tourist destination, Siargao needs every support it could get from the government.
At present, Siarelco services the electricity needs of Siargao Island in the province of Surigao del Norte.
According to ERC, proceeds from the loan would be used by Siarelco to finance its capital expenses for the next the period 2009 to 2011
Siarelco’s capital expenditures for the three-year period include the upgrade of power lines, replacement of electric wooden poles and inefficient transformers, inter-looping of power system and the acquisition of a substation circuit breaker.
Siarelco had been complaining of lack of funds which caused the deterioration of its services to its customers.
In April this year, Siarelco said its customers had to suffer a week-long blackout due to failure of its underwater power cables.
Based on the approved loan terms with NEA, Siarelco will pay within 15 years at an initial interest rate of 4.5 percent. The succeeding rates after the first release will be nine percent per year.
NEA is an attached agency of the Department of Energy (DOE), tasked with providing financial, technical, institutional and supervisory functions over electric cooperatives.
So far, NEA had revealed over P6 billion worth of loans to a number of ECs all over the country.
There are about 119 ECs nationwide, most of them serving the far flung areas not being serviced by big power distribution utilities.