INDEED, we are going to talk about Joint Venture Agreement a.k.a. JVA, what it is and what are its advantages – never mind the disadvantages as obviously there’s none – bearing in mind that it’s intended for mutual benefits for those involved.
For the uninitiated, a Joint Venture Agreement (JVA) is a business arrangement in which two or more parties agree to pool their resources for the purpose of accomplishing a specific task.
And lately, a JVA has been successfully done. Negros Electric and Power Corporation (NEPC) a.k.a. Negros Power (a sister company of MORE Power) between Primelectric Holdings Inc. (PHI) and Central Negros Electric Cooperative (CENECO), established to enhance power distribution/customer service for the cities of Bacolod, Bago, Talisay, Silay, and municipalities of Murcia, and Don Salvador Benedicto.
This inspired the Sangguniang Bayan (SB) of Pavia town to approve a resolution calling for the hastening of MORE Electric and Power Corporation’s (MORE Power) expansion into 15 municipalities, and Passi City, in Iloilo Province.
Introduced by SB members Daniel Fajardo II and Jose Maria Trimañez, the resolution further urged MORE Power – the sole power distributor in Iloilo City – to not only broaden its operations in Pavia but also to consider a joint venture agreement with Iloilo Electric Cooperative 1 (ILECO 1).
The Resolution cited MORE Power’s recent successful collaboration with CENECO in Bacolod City and Negros Occidental under the Negros Electric and Power Corporation franchise.
If this joint venture between MORE Power and ILECO does happen, what will be the advantages for those involved, basing it on the CENECO/NEPC JVA?
Let’s check out the highlights of the JVA between Primelectric Holdings Inc. (PHI, mother company of MORE Power) and CENECO:
1. There was no takeover; instead there’s a 70/30% sharing.
2. Both parties got 25 years franchise from Congress.
3. Prime Holdings Inc. gave 70% cash or P1.7 billion as payment for the distribution assets of CENECO worth P2.4 billion.
4. This amount is more than enough to pay for CENECO’s loans from the bank and the National Electrification Administration, refunds of customer bill deposits, plus separation and retirement pays for their employees.
5. CENECO will avail itself of a 30% profit share from NEPC.
6. Consumers will have dividends coming from the 30% share of CENECO.
7. CENECO will be given priority in hiring.
8. Negros Power has allocated an initial capital of P2 billion for a five-year plan to rehabilitate/modernize the electric infrastructure, to establish a robust distribution system.
9. Services will greatly improve and power rates will go down.
10. System loss cap of a private distribution utility is lower compared to an electric cooperative.
That’s the scenario and more if the joint venture between MORE Power and ILECO does happen and this will be greatly beneficial to the consumers and both parties involved.
Moving on, a year after initiating the bill deposit refund program, MORE Power has successfully released P2.8 million in refunds to 685 eligible customers.
In accordance with Article 7 of the Magna Carta for Residential Electricity Consumers, distribution utilities are mandated to refund the bill deposit of customers who have paid their bills on time for three consecutive years (36 months) and have no record of service disconnection.
The bill deposit is a necessary requirement for new meter applicants prior to the installation of their meters.
MORE Power reiterates that customers who are ineligible for the refund due to late payments over the past 36 months can still receive their bill deposit with annual interest when they choose to terminate their electric service.
Finally, the average residential electricity rate has decreased to P12.6668/kWh in August, due to a reduction in the generation charge. The decrease happened despite an additional P1.35/kWh added in the third installment of the staggered Wholesale Electricity Spot Market (WESM) charges, as per the Energy Regulatory Commission (ERC) order dated June 13, 2024.
MORE Power vonsumers can expect a reduced residential rate of P12.6667/kWh reflected in their bills received from August 18, 2024, to September 12, 2024.
As usual, well played indeed./PN
