For this undertaking, Salcon will pour in investment of P63.190 million. It has also been provided that CASURECO IV shall be paid fixed quarterly lease payment equivalent to 4.25 percent of the gross revenue in exchange for Salcon’s right to manage CASURECO IV operations.

A New Zealand-based consultancy firm Castalia Strategic Advisors, Inc. has been tapped as the transaction advisor; which conducted financial and technical evaluation of CASURECO IV in preparation for the conclusion of the IMC.

Instituting the IMC has been part of the reform process for the power industry, specifically geared on propping up the socalled ‘poor performing electric cooperatives’ to partner with private investors so they can implement much needed reforms their operations and management.

The Department of Energy (DoE) has noted that the deal will usher in better chance for the electric cooperative to perk up its delivery of service within its franchise area.

The pact was signed by Arnel P. Armea, board president of CASURECO IV and Dennis T. Villareal, president of Salcon; and witnessed by Energy Secretary Raphael P.M. Lotilla, Representative Arnulfo Fuentebella of Camarines Sur and Mr. Gil Gu Lee, president of Kepco Philippines Corporation.

Under the arrangement, Salcon will infuse risk capital and provide management expertise to Casureco to attain its service improvement goal. So far, it is the first electric cooperative to-date that entered into such agreement.

Despite the entry of a private investor partner, CASURECO IV is guaranteed that it retains its franchise and will also continue to own the assets and sets the standards of service to its customers.

"The entry of a private investor through an IMC will significantly help improve the performance of an ailing cooperative by assisting them to secure financing and management expertise to improve their operations," said Energy secretary Raphael P.M. Lotilla. (MMV)

Hankering for a success story on this initial agreement, the energy chief is already advancing calls on other electric cooperatives "to avail and access investment capital and management expertise from private sector entities through the IMC scheme."

CASURECO IV caters to the electricity needs of the municipalities of Caramoan, Garchitorena, Goa, Lagonoy, Ocampo, Presentacion, Sagñay, San Jose and Tigaon in Camarines Sur in the Bicol Region.

It has been hailed as one of the largest electric cooperatives in the country.

From what is considered one of the worst performing cooperatives in the last five years, the electric cooperative managed to trim down its system losses to 17.43 percent as of December 2005. (MMV)