An impressive turnaround

Barely four years ago, the Lanao del Sur Electric Cooperative (Lasureco) had all but collapsed.  It had run up debts amounting to P3.8 billion, with no clear way how this could be paid. It was collecting only 8 percent on its billable power, and release of power bills to consumers was four months delayed. And while the electric co-op served all of Lanao del Sur, only Marawi City and the municipality of Malabang (out of 40 municipalities) were being billed. The database of its member-consumers was grossly outdated, with only about 19,000 listed. Systems loss was a whopping 63 percent. None of the funds it received, including those externally provided for special purposes (such as 34 barangay electrification projects), were properly accounted for.

Employee salaries, benefits and retirement were not being paid. Some employees were pocketing collections, which were still being collected house-to-house. The co-op’s office, vehicles and equipment were filthy and dilapidated, and there were no office equipment and computers to speak of. Its compound was occupied by private houses belonging to its officers that had mushroomed like squatters. The audit by the National Electrification Administration (NEA) had judged Lasureco a failure in all aspects of its operations, and the firm had become an epitome of gross mismanagement and systemic corruption.

Lasureco is one of the electric cooperatives (ECs) distributing electric power in the Autonomous Region in Muslim Mindanao (ARMM); all of them have been performing way below the standard in the rest of Mindanao and of the country. Based on 2010 data from NEA, non-ARMM Mindanao electric cooperatives typically have collection efficiencies ranging from 95 to 100 percent, and systems losses of at most 14 percent. But the ARMM ECs were only collecting 19 percent (Lanao del Sur) to 66 percent (Basilan), and incurring system losses ranging from 18.3 percent (Lanao del Sur) to 47 percent (Maguindanao)—which made the ARMM ECs unique in their poor performance.

Electric cooperatives in the country have traditionally been beset with problems tracing to politics and politicians. The history of ECs in the country has been marked with repeated bailouts by the national government, as their debts mounted  due to poor collection and high systems losses. For most of the country, this has already changed, as 2010 NEA statistics show a 98 and 94 percent collection efficiency and 11.5 and 12.4 percent system loss for the Visayas and Luzon, respectively. But not so for the ARMM ECs, as the numbers above show. It is apparently common for mayors in the ARMM provinces to assume responsibility for their constituents’ electricity bills—i.e., assure their citizens free electricity, with the municipal government promising to pay their bills. But in the end, they typically fail to satisfactorily settle with the EC, thus the glaringly low collection rates. In the case of Lasureco, it also has to contend with the commonly prevailing sentiment that Lanao consumers are entitled to free electricity because they “own” Lanao Lake, the source of the water that runs the hydroelectric power plants powering most of Mindanao.

It was in this context that Lasureco had become the worst performing EC in the country, prompting the National Power Corp. (NPC) and NEA to intervene to save the cooperative. Three attempts at rehabilitation, with NPC and NEA management teams taking turns at the helm, failed to turn the cooperative around. At this juncture, US-trained electrical engineer Sultan Ashary P. Maongco, then the manager of NPC’s Accounts Management in Mindanao, was tasked to draw up a rehabilitation plan for Lasureco. On Nov. 28, 2007, he was appointed as project supervisor and acting general manager of Lasureco, with the mission of revitalizing the cooperative within five years.

Since then, Lasureco’s turnaround has been nothing short of phenomenal. Collection efficiency has jumped to 36 percent; GM Maongco is confident of bringing this up to 80-85 percent by next year. System loss has dropped to 18 percent, and Maongco is determined to bring this down to a single-digit level next year. He has not hesitated to cut electric services to those who do not pay regardless of kinship or position in society. Even amidst the on-going rehabilitation, the cooperative under Maongco’s leadership has already remitted over P102 million in payments for Lasureco’s debts, compared to only P1.1 million paid by the previous administration in the same number of years. Power supply has been stable, with system capacity at 90.5 MVA, a three-fold increase since Maongco started.

Salaries and benefits are now paid on time and employee professionalism and morale are at an unprecedented high. New and computerized systems have been established. Lasureco’s offices have been given a dramatic facelift and physical reorganization, and now exude a professional atmosphere. Consumers now actually come to pay their bills. The compound was rid of private houses and illegal structures, and the whole environment was made welcoming and pleasant. Maongco is proud to assert that all these reforms were funded through internally generated funds and loans. Banks now readily grant loans to Lasureco, a clear recognition of its newfound financial responsibility and trustworthiness. And Lasureco has since reaped numerous awards and citations recognizing its herculean efforts and outstanding accomplishments.

Visionary and exemplary governance, of the kind brought by Maongco into the erstwhile basket case that was Lasureco, tells me that there is yet hope for ARMM ECs, and indeed for ARMM in general.

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