Asian Energy Advisors

For a year or so now, the ADB has been looking at the possibility of pumping a significant amount of funds into the Philippine electric cooperative (EC) sector - particularly through NEA. The World Bank has historically provided huge amounts of funds into the ECs through NEA but discontinued the bulk of that support several years ago.

I’m not sure how much money the ADB is anticipating lending to the sector, but I’m guessing it’s on the order of USD 1 billion over a five year period. In the meantime it looks like they’ve reached agreement with the DOE to spend $550,000 to figure out more precisely what the needs are and the feasibility of it. This project will start in early 2008 and last eight months.

Here is the Outline Terms of Reference for the $550,000 project preparation TA (not the big loan project). These often get changed somewhat during final negotiations with the consultant, but not substantially. I haven’t heard yet what consultant has been selected - if indeed that decision has been made. NEA will be the Executing Agency (collaboratively supporting the consultants), but this is ADB’s project - they will control it.

Here’s the ADB report issued this month entitled Preparing the Rural Electric Cooperatives Development Project. The ADB architect overseeing their programs in this area is Zhai Yongping and you can contact him at +63 (2) 632-6476, Infrastructure Division, SERD, yzhai@adb.org

The ADB appears to be focusing on an important aspect of rural supply - that supply to areas that are not currently economically sustainable (i.e. it’s infeasible to charge the customers a tariff sufficiently high to recover the total costs of supplying them).

There are other entities providing support into the ECs. Much of this (though not all) is focused on ECs that are serving areas that are more economically sustainable.

For example, the IFC (whose support to the EC sector is becoming multi-faceted through several different programs) is embarking on a new technical assistance initiative in Mindanao to strengthen ECs in viable areas but with a slight twist (if I understand it correctly) - they would like to see the EC eco-system of EC management and the private sector consulting entities serving it become more professionalized and therefore self-sustainable. I’m sure I’m inappropriately putting words in their mouth, but that’s my concept of one of their objectives. I had coffee with their brand new project manager for the Mindanao initiative while in Davao the week before Christmas - Jed Sevilla. I understand he’ll be spending time both at the IFC offices in Makati and at the AMRECO (Association of Mindanao Rural Electric Cooperatives) office in Cagayan de Oro.

NRECA is embarking on a new initiative supporting the ECs on Panay for formulating a viable joint action consortium for multiple purposes, including power supply.

Disclosure: I was involved in preparing part of the research that IFC used in formulating its AMRECO initiative and I expect to be an advisor to NRECA on the Panay consortium initiative.

I find the interesting thing about the IFC and NRECA initiatives mentioned above is that they are working directly with the ECs - in contact/dialog with NEA but not through NEA. NEA has important roles to play in the EC program, but it may not be the (important) institutional role it played during the build-out of the rural electrification program.

By choice, NEA is already bifurcating it’s support to the ECs by “prioritizing” (in their words) its support to those ECs that have not registered with the Cooperative Development Authority (CDA). That’s an interesting approach; but not one I’d recommend to them. NEA’s future is much more robust. I’d love to see them break out of the strategic paradigm of the past 20 years and help unleash the phenomenal growth I see happening in the EC service territories over the next ten years.

How the various support programs interact with and play off of each other will be important to spreading the benefits of such efforts. Finding our way through the new dynamics in the EC power sector will be interesting - and a challenge for 2008. Let’s see where we are this time next year.