PROJECTS

Securing Private Participation in Regional Electricity Distribution Cooperatives, Philippines

The problem

Rural electricity cooperatives (ECs) in the Philippines were struggling to improve management and to raise finance for development. To support them, the Government sought to secure private investment. However, since ECs were self-governing and held area franchises under special legislation, the Government needed an innovative model to enable the private sector to invest in and operate ECs.

How we helped

Castalia designed Investment Management Contracts (IMCs), a model for securing private sector participation while keeping the cooperatives as legal, independent franchises. We worked with the association of ECs and individual EC Boards to identify willing participants for pilot transactions. We also marketed the model to private investors. We then ran the transaction process on behalf of the Boards of the willing ECs to ensure open, transparent and competitive procurement of IMCs.

Impact

PELCO II, an EC in the area north of Metro Manila, successfully procured an IMC with a private investor. After an initial contract, in 2014, PELCO II launched a further successful partnership with Comstech-Meralco. PELCO II was able to improve service reliability and invest to meet growing demand.