Crowninvestments Holdings Inc. and Desco Inc. said Tuesday the investment and management contract with the Zamboanga City Electric Cooperative Inc. is now in full effect.
Zamcelco proceeded with the general membership meeting that approved the P2.5-billion bid of Crowninvestmetns and Desco.
“With the contract now in full effect, Crowninvestments and Desco now manage the operations of the cooperative responsible for electricity distribution in Zamboanga City,” the parties said in a statement.
Zamcelco has been saddled with debt and mismanagement issues that resulted in a power crisis in the city, with frequent rotating power outages and millions of pesos wasted in systems losses.
“The Crown-Desco joint venture will be able to pay off the coop’s P1.5-billion debt, as well as upgrade electrical facilities that caused 23% systems loss for years,” it said.
The joint venture’s returns on the contract will depend on performance-based targets such as the National Electrification Administration-approved systems loss and collection efficiency ratings.
“Through their approval of the contract, Zamboanguenos―especially the 20,000 in attendance at the general membership meeting―have made clear that the joint venture is welcomed in the city where the power crisis continues to affect 128,000 households with rotating brownouts,” it said.
The joint venture said its bid to manage the operations of the Zamcelco was aimed at immediately solving the financial woes of the cooperative which handles the distribution of electricity in Zamboanga City.
“The offer is really good for Zamcelco. An offer that perhaps you cannot refuse,” said NEA administrator Edgardo Masongsong earlier.
“I am optimistic even for a coop to coop partnership, what more an investor with P2.5 billion,” he said.
The City Council of Zamboanga also issued a resolution expressing support to the decision of the board of Zamcelco to award the IMC to the joint venture of Crowninvestments and Desco.
The joint venture said it was ready to infuse P2.5 billion once all steps were taken.
“Our bid was welcomed with various statements of support. City officials and key stakeholders recognize that Zamcelco needs capital and professional management to upgrade the city grid and improve electricity services for the consumers,” the joint venture said.
Four other bidders submitted their technical qualifications for the IMC, including Davao Light and Industry, Nikolas Management, Filinvest and Comstech. These bidders did not submit a financial bid.
“The joint venture deems that this is the appropriate amount to pay all existing obligations, provide capital infusion to upgrade the facilities and improve the services of Zamcelco. The great city of Zamboanga deserves this infusion so as to be the premier distribution utility in Mindanao,” they said.
Desco is a long time player in the energy industry, with operations in an industrial estate in Laguna International Industrial Park.
Crowninvestments is a holding company looking at investing in various energy and infrastructure projects in the country.