Credit to Author: Jordeene B. Lagare| Date: Tue, 31 Mar 2020 16:12:02 +0000
Electric cooperatives (ECs) are allowed to seek short-term loans from banks to mitigate the negative impact of the coronavirus disease 2019 (Covid-19) on their operations, the National Electrification Administration (NEA) said on Tuesday.
According to NEA Administrator Edgardo Masongsong, all 121 ECs nationwide can avail themselves of these loans from financial institutions other than the agency, as stated in NEA Memorandum 2020-015.
This is to augment the monthly collection deficiencies that would cover their power bills, facilitate working capital requirements and the purchase of maintenance vehicles.
“We take cognizance of the ECs’ mandate to operate to ensure continued service delivery to the member-consumer-owners during [this] state of calamity. However, the financial condition of the ECs might be adversely affected due to the Covid-19 situation,” Masongsong said.
Under NEA Loan Policy 14-A, cooperatives may secure short-term funding from other sources, such as banks, financing companies and other established financial intermediaries, as long as they are reasonable and appropriate.
Terms and conditions of the loans must also be fair and equitable, such as the repayment period shall not exceed three years; interest rates are reasonable and at the lowest, if possible; and the loan amount shall not exceed three times the EC’s average power billings.
“No encumbrance of real properties, or a substantial portion of other properties or assets, will be made by the ECs,” Masongsong said.
Proper documentations of the loan/s must be submitted to the NEA once normal business operations resume, he added.