Rural Electrification Program (REP)
National Electrification Administration

The Problem

Before the development of NEA’s Sitio Master Plan in 2010, local access to electricity was limited. Rural communities were deprived of a basic service that many cannot now imagine their lives without. The National Electrification Administration (NEA) was created through a Republican Act in August 1969, and made into a corporation in August 1973 for the implementation of the country’s Rural Electrification Program (REP). For over four decades, NEA has undertaken this mission by mobilizing financial, institutional and technical assistance to 119 Electric Cooperatives (ECs) that distribute power on an area coverage basis.

NEA sought to meet the challenge of electrifying each household in a country of 7,107 islands, and through the years, the organization worked to transform sleepy villages into vibrant communities. At the flick of a switch, businesses flourished, health and medical services were made available, communication systems were put in place, jobs were created, crimes were reduced, and education systems were improved.

On May 10 2011, NEA passed the nine-million mark in nationwide household connection. It was both a milestone and a reminder of the fruits of perseverance in a continuing journey.

Solution and Key Benefits

 What is the initiative about? (the solution)
NEA is the first and only national agency and government-owned and controlled corporation (GOCC) to complete the Institute for Solidarity in Asia’s Performance Governance System (PGS), the official local adaptation of the Kaplan-Norton Balanced Scorecard. Under this governance framework, NEA has produced exemplary performance and breakthrough results. It envisions total countryside electrification by 2020.

47 million Filipinos have benefitted from NEA’s services. Broken down, that is 36,048 or 99.96% of 36,063 barangays (villages), and a total of 9.199 million member-consumers in EC franchise areas. The provision of rural electricity likewise resulted in the decentralization of economic activities, which saw the country’s gross domestic product (GDP) increase to 10% in 2010 from 7.6% in 1999. The literacy rate rose to 93.40% in 2010 from 83.37% in 1970, while the number of barangay health centers increased to 16,219 in 2007 from 14,416 in 1999. These figures seal REP’s status as one of the government’s most successful programs.

NEA delivered a financial turnaround by posting a net income beginning 2004 from a Php 5 billion net loss in 2003. It remains in the black with a strict implementation of economy measures and the institutionalization of an enhanced lending program to ECs. NEA’s 100% collection efficiency was reinforced by various incentives and motivational packages to borrower ECs, and it sticks to its commitment of 100% debt-servicing while adhering to audit rules and regulations. The Commission on Audit (COA) has given its unqualified opinion on NEA’s financial position for the years ending 2007, 2008, 2009 and 2010.

The goal of delivering excellent frontline services prompted NEA to develop a fast lane system. Beating an initial target of 72 hours, the agency was able to respond to fast lane documents within 42 hours based on its latest monitoring report. This was made possible through professionalism and career development programs for NEA and its ECs’ officials and employees. A strengthened alliance with the academe resulted in the formulation of a ladderized learning and growth program. An annual average of 3,000 participants has benefitted from this program in the last three (3) years.

Most recently, NEA was also named as one of the recipients of the First Environmental Excellence Award for 2011 by the Philippines’ Department of Environment and Natural Resources. NEA was recognized for its successful efforts in adopting and sustaining eco-friendly practices in the workplace beyond the Department of Energy’s 5-star rating in energy management.

Actors and Stakeholders

 Who proposed the solution, who implemented it and who were the stakeholders?
The national government recognized rural electrification to be an important vehicle for socio-economic and political reforms, and created NEA through Republic Act 6038. Through this organization, the government sought to achieve the total electrification of the Philippines on an “area coverage” basis. Later, the issuance of Presidential Decree 269 transformed NEA into a corporation and broadened its powers and capacity for growth and service.

To guide the fledgling organization, the National Rural Electric Cooperative Association (NRECA), an umbrella organization of ECs in the United States, was selected as a principal consulting agency in 1973 through a loan from the US Agency for International Development (USAID). The NEA-NRECA contract for consulting services covered the field of cooperative (co-op) organization, feasibility studies, loan preparation and negotiations, utility accounting, power use and commodity procurement.

The services of Stanley Engineering Consultants were likewise contracted in 1973 to assist in the engineering phase of the initial 36 ECs. The consultants worked with NEA engineering personnel in the review and evaluation of the construction work of local contractors, and assisted in developing an Oversees Procurement Plan for the program.

Four Philippine architecture and engineering (A&E) firms, namely Adrian Wilson International, Trans-Asia, DCCD and EDCOP acted as local counterparts in the design of the distribution systems and construction of the headquarter facilities of the ECs. In 1980’s, PHILDOR joined the four A&E Consultants.

In partnership with NEA and the 119 ECs, a large number of local construction firms put up electric distribution systems throughout the countryside. The Philippine Army’s engineering brigades were tapped in areas where peace and order problem was a concern. Concerted efforts of executive offices, local government units, civil and religious organizations were also sought for this purpose.

(a) Strategies

 Describe how and when the initiative was implemented by answering these questions
 a.      What were the strategies used to implement the initiative? In no more than 500 words, provide a summary of the main objectives and strategies of the initiative, how they were established and by whom.
Training and Education

Training of management and technical staff is crucial to the development of NEA and its ECs. Likewise, education programs are on top of the list of activities to create a feeling of belongingness among the consumer-members.

NEA created a compendium of development programs for all types of electrification workers and program professionals. Today, beneficiaries of these learning programs are trained in the latest electrification technologies, management systems and business practices. For several years, the NRECA also conducted seminars and on-the-job training in the United States of America for key personnel of NEA and ECs.

NEA entered into partnership with the local academic sector, tapping the University of the Philippines- National Engineering Center and Ateneo Graduate School of Business Center for Continuing Education and some ECs to enhance training deliveries to its clients.

In Toledo City, the Cebu III Electric Cooperative, Inc. (CEBECO III) houses the People Development Academy as its training center on corporate culture development.

Bayanihan (Community) Concept

NEA built on the inherent spirit of community volunteerism to accomplish the electrification process. Together, members of the institution and its beneficiary villages worked together to raise poles, string wire, deliver materials, and clear passageways. To some extent, the voluntary assistance extended by the rural volunteers could be considered as subsidies for start-up costs.

Compacts of Cooperation between and among the ECs through Task Force Kapatid (Brotherhood) have been institutionalized since the 80’s to accomplish activities like the energization of hard-to-reach barangays, to the immediate rehabilitation and restoration of dilapidated or devastated electric distribution lines. The Big Brother-Small Brother scheme has likewise been applied to help poor performing ECs improve performance. These programs are anchored on the deeply-entrenched traditions of cooperation, unity and concern among ECs under the leadership of NEA.

Quality Leadership and Collective Involvement.

The magnitude of the program necessitated a tough and dedicated NEA leadership to meet the committed performance targets. As a government corporation, NEA is fortunate to have evolved into the organization it is today, thanks to the able minds that have helmed its development. The Administrator, with the support of the Board, plays a crucial role in leading and inspiring employees and EC personnel at the forefront of the REP. The success of the program can be attributed to the close collaboration of the NEA and the ECs in every undertaking.

Strategic Alliance with Stakeholders

NEA’s Multi-Sectoral Governance Coalition (MSGC) is a vital solidarity mechanism for the REP. The MSGC is composed of internal and external stakeholders that advise the organization on its societal responsiveness. The internal stakeholders represent every pay grade in the organization, while the external stakeholders are composed of 12 national associations. The MSGC is involved in the development, recommendation and implementation of policies, plans and programs pertaining to ECs.

(b) Implementation

 b.      What were the key development and implementation steps and the chronology? No more than 500 words
In 2000, NEA was the first government corporation to apply for and receive an ISO 9001 certification. A quality management system (QMS) improved efficiency and productivity at minimal cost so that the organization could provide top notch services.

The fast-paced development brought about by the implementation of new power industry laws challenged the agency to reinvent and redefine its roles to ensure sustainability. The reforms and demands of setting new standards prompted NEA to institutionalize a governance system that would transcend leadership terms and harness responsible citizenship and institutional values. NEA felt the need to demonstrate equitable, accountable, responsible and transparent power distribution in all its operational aspects. The importance of ensuring internal process excellence and external stakeholder participation prompted NEA to adopt the Performance Governance System (PGS) as a performance-based governance framework.

NEA received the “PGS-Initiated” status on August 30, 2007 after having redefined and revalidated its Charter Statement, Roadmap and Governance Scorecard. These documents were adopted by the NEA Board of Administrators through a board resolution in February 2008, ensuring organization-wide participation.

NEA was elevated to “PGS-Compliant” status on August 29, 2008 after aligning the organization to the enterprise Governance Scorecard, and securing stakeholder buy-in through the creation of a Multi-Sectoral Governance Coalition (MSGC).

NEA obtained the third pathway recognition, “PGS-Proficient” on September 24, 2009, after assigning the Strategic Planning Division (SPD) as the Office of Strategy Management. This office was given the task of monitoring organizational scorecards and strategic projects.

NEA finally achieved the “PGS-Institutionalization” on September 23, 2010 after producing breakthrough results that were attested by third party audits. These audits were conducted on August 10, 12, 13 and 31 and September 1, 2010.

(c) Overcoming Obstacles

 c.      What were the main obstacles encountered? How were they overcome? No more than 500 words
The following challenges were encountered in the implementation of the program:

Great demand for conversion of previously energized barangays (villages) was met through solar to grid connection or Barangay Line Enhancement;

Financial constraints were overcome by encouraging international and local private sector participation.

Electrification of conflict areas was accomplished through the forging and implementation of a Memorandum of Agreement among concerned agencies for security of involved personnel;

Natural calamities were prepared for or addressed through pre- and post- mitigating measures such as Task Force Kapatid (Brotherhood);

Geographic barriers were broken by LGU and people participation and the use of stand-alone power sources; and

The expansion of electric distribution lines to the most remote areas was addressed through a long-term master plan to energize more than 30,000 unlit sitios/puroks (smaller communities).

(d) Use of Resources

 d.      What resources were used for the initiative and what were its key benefits? In no more than 500 words, specify what were the financial, technical and human resources’ costs associated with this initiative. Describe how resources were mobilized
With its meager resources, the Philippine Government resorted to foreign borrowings to finance its REP. A total amount of US $ 525 million was contracted during the period 1971 to 1999 from USAID, IBRD, OPEC, OECF, EDC, Chase Manhattan, ADB, KFW, UK, PROC and French loans. In turn, NEA had released the aggregate amount of Php 56 billion to borrower ECs composing of Php 42 billion loans and Php 14 billion subsidies.

Accordingly, the ECs were able to construct their respective electric distribution system which now account to about 284,782 circuit kilometers of lines supported by a total workforce of more than 21,000.

Sustainability and Transferability

  Is the initiative sustainable and transferable?
In less than a decade, the Philippines emerged as the “Rural Electrification Capital” of the world’s developing countries. No other government program or private undertaking has made a bigger impact on national development. As early as 1976, Rural Electrification Training Centers were created in Misamis Oriental and La Union to assist third-world countries in the establishment and development of their own electrification programs. Funded by USAID, these training centers were turned over to local ECs: MORESCO I and LUELCO which at present offer training on electrical trades, such as lineman training.

After connecting the 9 millionth consumer, and nearing its goal of 100% barangay (village) energization, NEA serves as Asia’s model on REP. It recently shared its best practices with World Bank representatives and participants of the Asian Institute of Management’s (AIM) workshops on Management for Senior Managers who are involved in the power generation and distribution industry. Delegates came from Kenya, India, Vietnam and Mongolia.

Moreover, NEA’s present Administrator is considered as one of the pillars of the REP, having risen from the ranks to serve the agency for more than three decades. As such, she was selected to sit as Member of the Steering Committee of ADB-initiated Energy for All Partnership, which aims to provide access to energy to an additional 100 million people by 2015.

Lessons Learned

 What are the impact of your initiative and the lessons learned?
1. NEA’s administrators showed significant political will in keeping the REP in the list of high-priority initiatives.

2. Long-term commitment of financial support assured adequate supply of materials and equipment. Foreign sources led by the USAID, extended a considerable amount of grants and loans after noting the effective implementation of the program during its initial stages of development. Likewise, the Philippine government appropriated adequate counterpart funds despite its limited financial resources.

3. As a model of public-private partnership, NEA was able to effectively meld the government’s vast resources with the ECs’ grassroots leadership to gain commercial footing and transform and improve rural communites.

4. Technical experts and consultants extended elemental assistance to the NEA and its ECs in both organizational and technical matters.

5. Beneficiary support was vital to the vision of countryside development and socio-economic improvement. Most noticeable were the free right-of-way extended to the ECs.

6. A well-defined Rural Electrification Roadmap adopted after extensive consultations with all stakeholders ensured the successful implementation of short-, medium-, and long-term goals.

Contact Information

Institution Name:   National Electrification Administration
Institution Type:   Government Agency  
Contact Person:   Edita Bueno
Title:   Head of Office  
Telephone/ Fax:   (63) 02-9261328 / (63) 02-9261320
Institution's / Project's Website:
Address:   57 NIA Road, Government Center, Diliman
Postal Code:   1101
City:   Quezon City
Country:   Philippines

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