BAGUIO CITY (Aug. 25) — The Benguet Electric Cooperative (Beneco) management and Baguio-Benguet Electric Consumers Coalition for Empowerment (BBECCE) are in an intense debate over the conversion of Beneco from non-stock to stock cooperative. However, Tongtongan ti Umili-Cordillera Peoples Alliance (TTU-CPA) maintains that beyond this conversion issue is the looming privatization of a basic service such as electric power.
The conversion issue
Beneco management and board want to maintain its status as non-stock cooperative under the National Electrification Administration (NEA) to maintain its rural electrification project. The management said conversion to stock cooperative boils down to conversion from service oriented to profit oriented.
However, the BBECCE claims that conversion to stock cooperative is the better option. The group accuses the Beneco management and board of corruption, claiming that directors are getting many perks. It is demanding transparency in decision-making and audit of funds.
Chie Galvez, TTU spokesperson, explained that status-quo or non-stock cooperative under NEA would not bring a change to Beneco’s corporate status. She said NEA will still dictate its rules and questions on ownership and transparency will remain.
She said that conversion to stock cooperative would make member-consumers feel that they own Beneco through their share capital/stocks, can have material benefit from the Beneco operation through dividends, and can decide on Beneco matters through the General Assembly without NEA intervention.
However, she said that the danger with this option lies in the possible superiority of member-consumers’ economic interest over the social aspect. She added that another danger is the monopoly of shares. According to the Cooperative Code, members can own up to 20% of the share capital of the cooperative. “This may be interpreted that each member can own 20% of a coop share at the maximum. If this happens, Beneco can be owned by few individuals, thus paving the way for privatization,” Galvez said.
Galvez said that conversion to stock corporation will be disadvantageous to the consumers. The conversion would make Beneco similar to Meralco where increases in electric rates are unstoppable because its owners/stockholders’ interest is to amass profits. She further said consumers could not decide on Beneco’s operation because the voting power will rely on the controlling shares of the stockholders.
The other option
According to TTU, another option is to register Beneco with the CDA under a non-stock status.
Galvez explained that registration with the CDA as non-stock coop would free electric cooperatives from the “martial law powers” of NEA, provide tax exceptions, mitigate corruption and give more power to consumer-members in decision-making. She added that NEA’s role of lending for rural electrification was of big help to electric cooperatives but it has too much power over the cooperative.
Under P.D. 1645, NEA has the legal authority to terminate an electric cooperative’s general managers, board of directors and employees; assign a NEA acting general manager and/or NEA project supervisor; and take over coop management and operations. “Under this set-up, while Beneco consumers decide during General Assemblies, NEA will always have the last say,” Galvez stressed.
The Cooperative Code provides that cooperatives with accumulated reserves and undivided net savings of not more than 10 million pesos shall be exempt from national, city, provincial, municipal or barangay taxes and, regardless of the amount of accumulated reserves and undivided net savings, shall be exempt from payment of local taxes.
Galvez said corruption could be mitigated through registration with the CDA because under the Cooperative Code, the directors shall not receive any compensation other than per diem and any compensation other than per diem may be granted to directors by a majority vote of the members.
However, legal questions concerning this option are not resolved. It is not included in the EPIRA and CDA is undecided if it will accept Beneco’s registration as non-stock.
“As consumers, we find ourselves in the middle of this debate and we are feeling the pressure to decide. While it is important that we position ourselves and pick an option now, it is more substantial to answer the question ‘why do we find ourselves in a very difficult situation?” Galvez stressed.
TTU and Beneco management agreed that the passage of the Electric Power Industry Reform Act (EPIRA) is the root cause of the conversion concerns of Beneco as provided in Sec. 57. EPIRA gave Beneco the option to convert to a stock cooperative under the Cooperative Development Authority (CDA), or Stock Corporation under the Securities and Exchange Commission (SEC) or enter into an Investment Management Contract (IMC) where a private company can buy an electric cooperative after 5 years of managing it.
She added that while EPIRA has given consumers ‘options’ to choose, in truth, they really have no option because they cannot escape the threat of privatization. Be it non-stock or stock, there is no guarantee that the member-consumers would own Beneco because EPIRA has opened electric cooperatives in the country to capitalists.
She added that Beneco member-consumers can never have lower rates because all the components of electric service is up for privatization which will put corporate interest over the provision of public service.
She further said that the best option does not lie in the corporate status of Beneco. She said a genuine electric service could only be realized if the entire power sector is nationalized. “This nationalization should be interpreted as a goal for the government to take back the power industry and counter privatization,” she said.
Behind all these arguments is the fact that Beneco needs vigilant member-consumers. At the rate that our power service is running, we badly need active consumers to guard our electric cooperative against the threat of privatization alongside with other disadvantages that EPIRA has instigated.
Consumers should also scrutinize Beneco records to protect the interest of the cooperative against unscrupulous transactions. If allegations of corruption and abuse of authority against Beneco management and directors (past and present) would be found valid, then they should be held liable.
While the conversion battle intensifies, the challenge for the member-consumers of Beneco to grasp the issue in its entirety is becoming more significant. Our decision on conversion must be accompanied by our commitment to fight EPIRA and to demand government concern for the abandoned power industry. Unless we uproot and fight the real problem, we can never have genuine electric service.
Galvez said President Gloria Macapagal-Arroyo signed EPIRA into law in 2001 despite intense disapproval by the people. She said EPIRA seeks to restructure the electricity industry, privatize the National Power Corporation (Napocor) and deregulate the power industry for the entry of foreign companies regardless of the costs to the public. “By allowing the all-out sale of the Philippine electric service through EPIRA, the government has in effect abandoned the provision of this essential service,” she added.
According to TTU records, EPIRA created the Power Sector Assets and Liabilities Management Corporation (PSALM), which “shall take ownership of all existing Napocor generation assets, liabilities, IPP contracts, real estate and all other disposable assets. The principal purpose of the PSALM Corp. is to manage the orderly sale of Napocor assets and IPP contracts with the objective of liquidating all Napocor financial obligations and stranded contract costs in an optimal manner.”
The group added that EPIRA required Napocor to establish the Transmission Company (Transco), which will take over the transmission and sub-transmission functions, assets, and liabilities of Napocor. EPIRA also mandated the selling of Transco’s to private businesses. # via NORDIS