Sunday, December 4, 2011
THE score on the paperless Baguio-Benguet Electric Cooperative
(Beneco) deal is set to be ironed-out soon with Beneco tasked to draft a
formal agreement to end nearly two years of dispute as to how much one
owes the other.
Mayor Mauricio Domogan said the parties’ joint technical team finally
came up with common formula to compute power purchased by Beneco and
the City-led operations of the Asin Mini-hydroelectric Plants (AMP)
after a meeting last November 29.
The mayor expressed hope some adjustments could be made in the
billing computations to squeeze out a bit more doe from the 86-year-old
AMP.
“During the November 29 meeting, Beneco General Manager Gerardo
Versoza accepted reduction of systems loss from 18.5 percent to 8.5
percent,” Domogan said.
The reduction, the mayor said, translates into P8.5 million in
payables arising from the baseless over-deduction of 18.5 percent
systems loss discounted from the amount Beneco was supposed to pay the
city had the same been pegged to 8.5-percent.
The P8.5 million shall be paid within a period of 27 months -- the
same length of time Beneco used the 18.5-percent systems loss as a way
of discounting its payables to the city.
Domogan said, “I don’t understand why Beneco even deducts as much as
18-percent [which could translate to bigger income for the city] when it
is merely a buyer of the power we produce.”
Beneco and the City Government, nil written agreement, likewise
consented to an electric power exchange rate using National Power
Corporation standard power tariff at P4.80 per KWH sometime in 2007.
“But records show us otherwise,” Domogan said, adding: “I don’t see Beneco using NPC rates as basis of their computations.”
Meanwhile, Domogan revealed Beneco’s apparent grunting over a
provision in the bidding conditions for privatization of the hydros.
He said “Beneco wrote the council saying they were allegedly
discriminated upon with the condition that only cooperatives registered
under the Cooperative Development Authority (CDA) can join the bid.”
“I explained however that, while they may be disqualified from
bidding not being CDA-registered, they may bid as a National Irrigation
Administration (NIA) – registered cooperative,” he added. (Isagani Liporada)
Friday, December 9, 2011
Leyeco V’s plea for 77-centavo hike includes flagrant expenses
A SCANNED COPY of the operating expenses of
Leyeco V from 2005 to 2009. NASECORE points out it is worth
scrutinizing. Noteworthy are the Employees Benefits. There is also the
advertising expense, the “miscellaneous”, and “uncollectible accounts”.
NASECORE said that electric utilities are mandated by law to be prudent
with its expenditures, following 3 tenets: Is it needed? Is it
recurring? And will it benefit the consumers?
Rodolfo “Butch” Celestial, regional coordinator of National Association of Electricity Consumers for Reforms, Inc. (Nasecore), said that if only Leyeco V consumers would care to scrutinize the coop’s petition to raise power rates by 77-centavos per kilowatt-hour for the next five years, some proposed expenditures are “flagrant” or immoral.
This was Celestial’s observation on Saturday before a forum of the Ormoc Chamber of Commerce and Industry, together with the Consumers Advocate Group, when he walked them through some items in the petition.
He said that the law on electric utilities requires that expenditures be prudent.
The law, he added, operates on three simple tenets: Is it needed? Is it recurring? And will it redound to the benefit of the consumers?
“Do you need a mini-Superdome?”, he asked. “Will you benefit from it?”, he added. “No”, the audience chorused.
“Do you think it can be finished with only P3-million? The cost of a residential house nowadays?”, he posed further.
The NASECORE official said he wonders how many more “flagrant” expenses will Leyeco V consumers discover on the 208-page Distribution Development Plan for 2011-2015.
He urged the audience to attend the December 2 “orientation” on the petition as ordered by ERC on Leyeco V, when it noticed that majority of the people who attended the hearing were coop employees and there were only three board directors around.
“It’s time you wake up”, he said, and “get involved”.
NASECORE acted as intervenor during the hearing on the petition last November 8, and succeeded in having it suspended after the hearing officer noted that even the proponents could not explain their brief well.
Over-collection of P250-million
He also made some startling revelations. He said that per their study of Leyeco V’s financial reports for a period of five years, they have good reason to believe that the coop has “over collected” from its consumers some P250-million over the years.
“Remember, the coop is only allowed to charge a fixed amount over its actual purchased power and its total operating expenses remains more or less the same”, he said. But over the years, he added, the power purchased has increased, meaning there has been an increase of revenue for Leyeco V vis a vis it’s usual, recurring operating expenses.
In businessman’s lingo, he said, this is called “increased profit” which is unconscionable because Leyeco V is supposed to be a non-stock, non-profit “cooperative”. “This is your money. They should be returning that to you. If not in cash, then in form of deductions from your bill.”, he said.
The NASECORE has already written the Energy Regulatory Commission about it and they are hoping for a positive feedback anytime. NASECORE is the same group that succeeded in making MERALCO refund its consumers an “over collection” of more than P800-million.
Five percent reinvestment fund
He also explained about the five percent “reinvestment fund”, a strictly regulated fund. He said this fund could only be used by submitting a development plan to the National Electrification Administration and have it approved.
Their queries show that Leyeco V has not touched this fund, which it could have used to improve its lines and service over the years without waiting to petition for an increase of 77-centavos to do a job that it could have done years ago.
A copy of the audited financial statement of Leyeco V obtained show that the so-called “reinvestment fund” of the Leyeco V has reached 290-million already.
This does not include a P51-million fund that was supposed to be “refunded” to consumers for their meter deposits which was proposed during the general assembly to be “donated” to the coop as “contribution in aid of construction”.
During that assembly, it was explained that if it would be forced that the cooperative be made to cough up P51-million, then it would have liquidity problems.
But NASECORE claims that the coop has been making a profit through the years. In 2010, it posted a net profit of 42-million before a depreciation of P11-million was deducted.
NASECORE also furnished the audience copies of the operating, maintenance and administrative expenses of the coop from 2005 to 2009. He said that if perused closely, there are items like roughly an average of P 1. 3 million for “information, instructional and advertising”; another P 1.3-million for “miscellaneous”; and “employees benefits” for 2009 is at P38-million already. There is also an average of P1-million a year for “representation and entertainment”.
He said these were items that were worth looking into. Again, he said, it should follow the 3 principles: Is it needed? Is it recurring? And will it redound to the consumers’ benefit?
Electric coop employees highly paid
Celestial said that consumers might be surprised to know that electric cooperative managers and employees are among the highest paid, with lots of perks and benefits.
Atty. Jerry Gwen Conde of Leyeco II in Tacloban, he said, receives a monthly salary of P95,000 plus perks. Concurrently the manager of Leyeco III in Tunga, he also gets another P40,000. “He is the only person I know who can work 200 percent”, Celestial joked.
He added that with this information, “are you not curious to know how much your manager is receiving?”
“How much do you think your previous manager get for his retirement?”, he added, because the manager of SAMELCO who just recently retired got P10-million.
The figure surprised Atty. Roy Bernard Fiel who whooped “Wow, mura man og GOCC!”.
CDA registration
The speaker, on the other hand, said that what was important was that Leyeco V consumers “start waking up” and “be vigilant”. He also explained their group is advocating for registration of the cooperatives with the Cooperative Development Authority (CDA).
This way, he said, people become the real owners of the electric utility and whatever profits the utility makes, it will be returned to them in patronage refunds and dividends as “owners” of the coop.
He debunked claims that cooperatives that opted to register with CDA have flopped. He said that in a future forum, he would bring over the manager of a successful CDA registered electric cooperative to speak before the chamber, including the APEC party-list congressman.
APEC, he said, was Leyeco V’s party list of choice in the past year but they junked it last 2010 because APEC advocated to be registered under CDA.
Meanwhile, Atty. Fiel said that the Ormoc Chamber would not oppose the petition for increase just for the sake of opposing. He said the chamber is willing to hear what Leyeco V plans to do with the increase it is asking, but he would also want honest answers to some questions that has formed in his mind.
Fiel is not new to opposing Leyeco V petitions for rate hikes. During his incumbency as president, he opposed a similar petition and was able to hold it off for around four years. Unfortunately, he was not able to pursue it because the chamber lacked funds. The hearings then were being held in Manila.
Celestial, however, said this is not true anymore. As long as the consumers write ERC to hold the hearings where the affected localities are, they come.
http://bit.ly/rOSiPx
Friday, December 2, 2011
Newscoop’s net income up by P84T this year
Thursday, December 1, 2011
THE Cebu News Workers Multipurpose Cooperative (Newscoop) announced a net income of P793,000 as of Oct. 31, or an increase of P84,000 compared to the P709,000 of the same period last year.
Newscoop chairman Elias O. Baquero is confident that they will meet the P1-million target income by the end of this year, as they are maximizing the utilization of idle funds such as placing them in time deposits and products distribution.
“The amount is already a net income. This means we can give more dividends to our Newscoop members during the general assembly in April 2012,” Baquero said.
The dividends for 2010 was P437,000 of which the Newscoop Board is planning to increase by P600,000 for this year.
Support
Baquero was grateful for the support of the members of the Board, namely Oscar Pineda, Michelle P. So, Joseph Tubilan and Luz Cuyos, all of Sun.Star Cebu; vice chairperson Mayen Angbetic Tan, Mariflor Perolina, Lucky Malicay and John Rey Saavedra, all of The Freeman; Sam Costanilla of CCTN 47; and Chester Abadilla of radio dyRF for their participation in the formulation of business policies and its implementation by the management.
The others who also played an active role in the Newscoop operations are manager-on-leave Roberta Verano, credit committee chair Marissa Fernan, secretary Liv G. Campo, corporate treasurer Eileen G. Mangubat, Comelec chair Debbie Duraliza, Emy Lucena, among others.
Assets
Baquero said that as of Oct. 31, Newscoop’s total assets (with a very high liquidity percentage) is P13.825 million. This figure has been verified by Certified Public Accountant Franco Baricuatro, and is still increasing.
According to the records of the Cooperative Development Authority (CDA), Newscoop is the only successful media cooperative in the country, and with a strong Board of Directors at present.
Acting manager Evelyn Sarsale said that the target expenses for 2011 is P1.5 million which include salaries and wages; premiums for Social Security System (SSS), Philhealth and Pag-ibig; general assembly expenses; meetings and conferences; office supplies; and travels and transportation; among others. But so far, with only less than a month left, the total expenses are P1.1 million.
Evaluation
“Although seminars for members of the Board of Directors are mandatory under Republic Act 9520, we were able to trim down expenses to maximize net income,” Baquero added.
Last month, the National Confederation of Cooperatives (NATCCO) Network conducted evaluations on the more than 1,500 cooperatives in the Visayas, and they concluded that Newscoop improved its rating rank from 18 to 13.
THE Cebu News Workers Multipurpose Cooperative (Newscoop) announced a net income of P793,000 as of Oct. 31, or an increase of P84,000 compared to the P709,000 of the same period last year.
Newscoop chairman Elias O. Baquero is confident that they will meet the P1-million target income by the end of this year, as they are maximizing the utilization of idle funds such as placing them in time deposits and products distribution.
“The amount is already a net income. This means we can give more dividends to our Newscoop members during the general assembly in April 2012,” Baquero said.
The dividends for 2010 was P437,000 of which the Newscoop Board is planning to increase by P600,000 for this year.
Support
Baquero was grateful for the support of the members of the Board, namely Oscar Pineda, Michelle P. So, Joseph Tubilan and Luz Cuyos, all of Sun.Star Cebu; vice chairperson Mayen Angbetic Tan, Mariflor Perolina, Lucky Malicay and John Rey Saavedra, all of The Freeman; Sam Costanilla of CCTN 47; and Chester Abadilla of radio dyRF for their participation in the formulation of business policies and its implementation by the management.
The others who also played an active role in the Newscoop operations are manager-on-leave Roberta Verano, credit committee chair Marissa Fernan, secretary Liv G. Campo, corporate treasurer Eileen G. Mangubat, Comelec chair Debbie Duraliza, Emy Lucena, among others.
Assets
Baquero said that as of Oct. 31, Newscoop’s total assets (with a very high liquidity percentage) is P13.825 million. This figure has been verified by Certified Public Accountant Franco Baricuatro, and is still increasing.
According to the records of the Cooperative Development Authority (CDA), Newscoop is the only successful media cooperative in the country, and with a strong Board of Directors at present.
Acting manager Evelyn Sarsale said that the target expenses for 2011 is P1.5 million which include salaries and wages; premiums for Social Security System (SSS), Philhealth and Pag-ibig; general assembly expenses; meetings and conferences; office supplies; and travels and transportation; among others. But so far, with only less than a month left, the total expenses are P1.1 million.
Evaluation
“Although seminars for members of the Board of Directors are mandatory under Republic Act 9520, we were able to trim down expenses to maximize net income,” Baquero added.
Last month, the National Confederation of Cooperatives (NATCCO) Network conducted evaluations on the more than 1,500 cooperatives in the Visayas, and they concluded that Newscoop improved its rating rank from 18 to 13.
Thursday, December 1, 2011
Electric coops do not need CDA: lawyer
By Loui S. Maliza
Monday, November 28, 2011A LAWYER said electric cooperatives do not need to be registered with the Cooperative Development Authority (CDA) to become stronger in servicing its concessionaires.
Lawyer Chito Oclarit said electric cooperatives are created by law under the supervision of the National Electrification Administration (NEA).
“That’s why we’re not fake,” Oclarit said in response to allegations that most of electric cooperatives are actually operating not as “genuine cooperatives.”
Oclarit is one of the legal counsels for the Misamis Oriental Rural Electric Service Cooperative in Laguindingan town, Misamis Oriental.
He said once the electric cooperatives register with the CDA, it would practically become as stock organization.
“And if we become as stock cooperative, our rural electrification projects would be stopped. We cannot anymore help the rural areas to be energized. We already exist 40 years ago, and this is our program to energize even those areas that are not viable,” he said.
Running well
Out of 119 electric cooperatives, only 12 registered with the CDA.
“But most of them went bankrupted,” Oclarit said.
He said electric cooperatives are “running well,” and do not need the supervision of the cooperative agency.
“If we become as stock cooperative, maybe only five people control certain electric cooperative,” he warned.
The lawyer even said electric cooperatives branded as “fake” are earning that it can even finance its rural energization programs.
Tax exemption and dividends
According to the CDA, electric cooperatives are tax exempt if registered with the cooperative department. But according to Oclarit, it would be more advantageous for the power providers to stay under the umbrella of the NEA.
“Electric cooperatives are taxed up to one percent only and we give return of investment (ROI) in the form of dividends to the members from eight to 12 percent. What if these dividends are used to energize the rural areas, it would be more advantageous to the government. Even President Benigno Aquino supports the rural electrification programs of these electric cooperatives,” he said.
As non-stock non-profit organization, electric cooperatives are giving ROIs to its concessionaires in the form of “patronage refund.”
“We’re not looking at returning the investments of the consumers… we are concentrating on our rural electrification programs. We need to give priorities to the people first before dividends,” he said.
http://bit.ly/tzDxsD
Board member: Tax electric coops now
By Florence F. Hibionada
Sunday, November 27, 2011THE Provincial Board is set to deliberate the imposition of real property tax (RPT) from all electric cooperatives in Iloilo City.
Board Member Gerardo Flores, in a privilege speech Friday, proposed the move as he pointed out to the body a Supreme Court (SC) ruling that supposedly allows now RPT collection.
Such, as he noted the lifting of an earlier temporary restraining order (TRO) that held off imposition of said tax dues.
Electric cooperatives in the country, including the Iloilo I Electric Cooperative Inc. (Ileco 1), hurled to court the Department of Interior and Local Government and the Department of Finance.
The contention was that Sections 193 and 234 of Republic Act 7160, otherwise known as the Local Government Code, were unconstitutional.
The electric cooperatives’ position was that government incentives are in place and guaranteed among others the permanent exemption from payment of income taxes. The group said Presidential Decree 269 covered this, thus the exemption from payment of local taxes, including RPT.
While Sections 193 and 234 of RA 7160, the electric cooperatives said, effected the withdrawal of said tax exemption. The group added the provision discriminated the industry and was “in violation of equal protection of the law clause.”
But Flores said the petition and position of the electric cooperatives have been denied after the earlier TRO issued was lifted.
“With the above decision of the Supreme Court, only those cooperative under the Cooperative Code of the Philippines are exempted from the LGU’s taxing powers and effect, renders Ileco 1 and the rest of the electric cooperatives in Iloilo, which are not registered under RA No. 6938, taxable,” Flores said.
“In this regard, this representation would like to propose that with the lifting of the TRO, the provincial assessor and the municipal assessor to make a classification, appraisal and assessment of all properties of Ileco I, II, III, and to assess the taxes of these electric cooperatives on every host LGU for ten years thereto,” Flores added.
At the center of this recurring issue is the Department of Justice’s stance that in order for a cooperative to enjoy incentives granted by RA 6938, the registration with the Cooperative Development Authority (CDA) is required. With that, no CDA registration, no exemption.
The Bureau of Local Government Finance in Memorandum Circular No. 13-2003 stated that the same wherein only electric cooperatives registered with the CDA are exempt from RPT.
http://bit.ly/tcL486
Revisiting our amended Cooperative Code
Business Option
By NAPOLEON T. CABELLO
November 29, 2011, 2:03am
It’s also interesting to note that cooperatives have a special mention in our Constitution. Section 1 of Article XII mandates among others, that the state shall promote industrialization and full employment through private enterprises, including corporation, cooperatives, and similar collective organizations. The entire Section 15 under same article further provides that “the Congress shall create an agency to promote the viability and growth of cooperatives as instruments for social justice and economic development.” Thus, under our Constitution, we could reasonably argue that when we need a job, there are three alternatives legally available: get a job provided by somebody else (corporate employment); invent a job and work by yourself (entrepreneurship); or work in cooperation with others (cooperatives).
Sadly, after more than two decades, our cooperative development efforts still urgently need the light of day. In 2009, there were 78,611 cooperatives existing on paper but only a third or 23,836 were reported operational. These active cooperatives were composed of 5,856,000 members or a mere 6.0 percent of our total population. This is a far cry from Singapore’s 50.0 percent! We are also lagging behind our other Asian neighbors. As measured against their total number of family households, cooperative members in Indonesia and Japan represent 27.5 percent and 33.0 percent, respectively. South Korea is also much ahead with 40 percent of their agriculture produce being marketed via cooperatives.
On Feb. 17, 2009 our 18-year old law was finally amended to further strengthen the regulatory powers of the Cooperative Development Authority (CDA), an agency tasked to oversee the operation of all cooperatives nationwide. The new code (R.A. 9520) further grants limited banking functions, expands the types or categories of cooperatives, and provides enhancements to their existing tax exemption privileges and non-tax benefits. Some of the salient features of the new code are itemized below.
Tax-Exemption Benefits
A cooperative must be duly registered with CDA and must hold a BIR Certificate of Tax Exemption before it could officially avail of tax exemptions. R.A. 9520 differentiates cooperatives which transact business only with their members and those that deal with both members and non-members. For the first classification, cooperatives are fully exempted from paying all existing taxes and fees such as: the 32 percent income tax, 12 percent VAT, percentage tax, customs duties, donors’ tax, excise tax, documentary stamp tax, and annual registration fee. Exemption also covers taxes on transactions with banks and insurance companies, including but not limited to the 20 percent final withholding tax on interest deposits and 7.5 percent final tax on interest income derived from foreign currency deposits.
For cooperatives that deal with both members and non-members, if the accumulated reserves and undivided net savings do not exceed P10 million, the same tax exemption privileges apply, otherwise, only transactions with members are tax-exempt. Overall, however, incomes that are not related to the cooperative’s main business are still subject to certain applicable taxes such as capital gains tax as well as withholding tax on other extraordinary compensation or income.
Non-Tax Privileges
Cooperatives may enter into contracts with local government units to have preferential right to supply agricultural and marine products to government institutions and agencies. They are also exempted from prequalification bidding requirements when transacting business with the government. They can also deposit important documents in the safe of municipal/city treasurer and other government offices free of charge. They can also be represented pro-bono by the provincial or city prosecutor or the Office of the Solicitor General except when the adverse party is the government. Cooperatives are also exempted from paying court/sheriff fees and putting up a bond during court litigation.
The new code also allows the conversion of Credit Cooperatives into Financial Services Cooperative to provide savings and credit to their members and other financial services subject to the regulations of the Bangko Sentral ng Pilipinas (BSP). Certain cooperatives like housing and transport services are also entitled to financial support from various government financing institutions.
Other Major Conditions and Features
R.A. 9520 prohibits members of the board of directors from assuming management functions directly involved in day-to-day operation (this was the source of conflicts among members and their officers and directors under the old law). The new code has also professionalized the management and operation of cooperatives and provided monitoring tools for the cooperative in conducting self-assessments of their managerial, financial, and social objectives. However, newly-organized cooperatives are not allowed to function as multi-purpose cooperatives except after two years of operation.
To provide more livelihood opportunities, R.A. 9520 has also expanded the types of cooperatives allowed from six to about seventeen that now specifically includes: advocacy, cooperative bank, agrarian land reform, electricity, water, dairy, education, financial services, health services, housing, fishermen, insurance, transport, workers coops, and others.
***
(The author is a member of the Financial Executives Institute of the Philippines (FINEX). For comments, his email address: napcabello@yahoo.com).
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