Electricity cooperatives (EC) are allowed to seek short-term loans from banks to mitigate the negative impact of coronavirus disease 2019 (Covid-19) on their operations, the National Electrification Administration said on Tuesday. (NEA).
According to NEA administrator Edgardo Masongsong, the country’s 121 ECs can avail these loans from financial institutions other than the agency, as discussed in NEA memorandum 2020-015.
This is to increase the monthly collection deficits that would cover their electricity bills, facilitate working capital needs and the purchase of maintenance vehicles.
“We are aware of the EC’s mandate to operate to ensure continued service delivery to member-consumer-owners during [this] state of calamity. However, the financial situation of the EC could be negatively affected due to the Covid-19 situation, ”Masongsong said.
Under NEA Lending Policy 14-A, cooperatives can obtain short-term financing from other sources, such as banks, finance companies and other established financial intermediaries, as long as they ‘they are reasonable and appropriate.
The terms and conditions of the loans should also be fair and equitable, such that the repayment period should not exceed three years; interest rates are reasonable and lowest, if possible; and the loan amount should not exceed three times the average EC electricity bills.
“No charge of real estate, or a substantial part of other properties or assets, will be made by the EC,” Masongsong said.
The appropriate documents for the loan (s) must be submitted to the NEA once normal business operations resume, he added.