Rural Electrification Program (REP)
National Electrification Administration

The Problem

In the past, access to electricity in the Philippines was limited to cities and highly urbanized areas. Rural communities were deprived of this basic service, which many cannot imagine their lives to be without. The National Electrification Administration (NEA) was created through a Republic 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 to their respective areas.

NEA sought to meet the challenge of providing electricity to each household in a country of 7,107 islands, and through the years, the organization has 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, more jobs were created, crimes were reduced, and education systems were improved.

As it passed the 9.5 million mark in nationwide household connections in August 2012, NEA has persevered in its continuing journey to expand rural electrification to the farthest and least populated communities to ensure inclusive growth and generate job opportunities.

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 shown exemplary performance and produced breakthrough results. It envisions total countryside electrification by 2020.

About 47.5 million Filipinos have benefitted from NEA’s services. Broken down, that is 36,049 (99.96%) of 36,063 barangays (villages), and a total of 9.5 million member-consumers in the EC franchise areas. The provision of rural electricity has likewise resulted in the decentralization of economic activities, which saw the establishment of 456,400 commercial and industrial consumers in the countryside. The literacy rate rose from 83.37% in 1970 to 96.10% in 2008, while the number of barangay (village) health centers has increased to 17,018 in 2008 from 14,416 in 1999. These figures seal the Rural Electrification Program’s status as one of the government’s most successful programs.

In 2004, NEA brought about a financial turnaround by posting a net income for the year from a Php 5 billion net loss in 2003. It has remained in the black with the strict implementation of economic measures and the institutionalization of an enhanced lending program to ECs. NEA’s 100% collection efficiency was reinforced by various incentives and motivational packages geared towards 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, 2010 and 2011. The unqualified opinion of the Commission on Audit is a testament to NEA’s transparency efforts and their adherence to the rules and regulations.

With the goal of delivering excellent frontline services, NEA developed the “fast lane system”. Beating the 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 the 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, which has benefited an average of 3,000 participants in the last four years.

Recently, NEA was also a recipient of the First Environmental Excellence Award (2011) given 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, as well as the 5-Star Rating given by the Department of Energy for their efforts in energy management.

Actors and Stakeholders

 Who proposed the solution, who implemented it and who were the stakeholders?
The national government recognized rural electrification as an important vehicle for socio-economic and political reforms, and created NEA through Republic Act 6038. Through this organization, the government attempted to achieve the total electrification of the Philippines through 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 to be 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 evaluation of the construction work of local contractors, and assisted in developing an Oversees Procurement Plan for the program.

Four Philippine architectural 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 the 1980s, 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 the peace and order problem was a concern. The concerted efforts of the 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

The training of management and technical staff is crucial to the development of NEA and its ECs. Likewise, in order to create a sense of belonging for consumer members, NEA is looking at different education programs.

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, NRECA also conducted seminars and on-the-job trainings in the USA for key personnel of NEA and ECs.

NEA entered into a partnership with the local academic sector, tapping the University of the Philippines- National Engineering Center, the Ateneo Graduate School of Business Center for Continuing Education, and several ECs, to enhance the delivery of training modules for their 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 electrification projects. Together, members of the institution and its beneficiary villages worked together to erect poles, string wires, deliver materials, and clear passageways. To some extent, the voluntary assistance extended by rural volunteers could even be considered subsidies for start-up costs.

Compacts of Cooperation between the ECs through Task Force Kapatid (Brotherhood) have been institutionalized since the 80s to accomplish activities like the energization of hard-to-reach barangays and 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-Sector 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 EC national associations. The MSGC is involved in the development, recommendation, and implementation of policies, plans, and programs pertaining to ECs.

Earlier this year, NEA employed a local civil society organization (CSO) to gauge the program’s impact indicators on the beneficiaries’ economic growth, poverty reduction, human development, and governance.

(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.

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

NEA was conferred “PGS-Initiated” on 30 August 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 corporate-wide participation.
NEA was elevated to the “PGS-Compliant” level on 29 August 2008, after aligning the organization to the enterprise Government Scorecard, and securing stakeholder buy-in through the creation of a Multi-Sector Governance Coalition (MSGC).

NEA obtained the third pathway recognition as “PGS-Proficient” on 24 September 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 status of “PGS-Institutionalization” on 23 September 2010 after producing breakthrough results that were validated through third-party audits. These audits were conducted on 10, 12, 13 and 31 August and 1 September 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 REP:

- The great demand for conversion of previously energized barangays (villages) was addressed through a solar to grid connection or Barangay Line Enhancement;

- Financial constraints were overcome by seeking government support and encouraging international and local private sector participation;

- The electrification of conflict areas was accomplished through the forging and implementation of a Memorandum of Agreement with concerned agencies for the 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 addressed through the use of local government unit and people participation, and the use of the stand alone power sources; and

- The expansion of electric distribution lines to the most remote areas of the Philippines was addressed through a long-term master plan, which sought 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 loans to finance its REP. A total amount of US $ 525 million was contracted during the period 1971 to 1999 from various organizations and countries such as USAID, IBRD, OPEC, OECF, EDC, Chase Manhattan, ADB, KFW, UK, PROC and France. In turn, NEA has released an aggregate amount of Php 62 billion (Php 48 billion in loans and Php 14 billion in subsidies) to borrower ECs.

Through these subsidies and loans, the ECs were able to construct their own electric distribution systems which now account for about 290,412 circuit kilometers of lines supported by a total workforce of more than 22,000 all over the countryside.

Sustainability and Transferability

  Is the initiative sustainable and transferable?
In less than a decade, the Philippines has 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 its own electrification programs. Funded by USAID, these training centers were turned over to local ECs: MORESCO I and LUELCO. The training centers presently offer training on electrical trades, such as linemen training.

After connecting the 9.5 millionth-consumer, and nearing its goal of 100% barangay (village) energization, NEA serves as Asia’s model for 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 one of the pillars of the REP, having served the agency for more than three decades and rising from the ranks in various capacities. As such, she was selected to sit as a Member of the Steering Committee of ADB initiative Energy for All Partnership, which aims to provide access to energy for an additional 100 million people by 2015.

Lessons Learned

 What are the impact of your initiative and the lessons learned?
As envisioned, lighting the countryside was not simple task. However, the presence of the following vital and basic elements of success gave hope to both NEA and the ECs:

1. NEA’s Administrators showed significant political will in maintaining the REP as a high priority initiative.

2. Long-term commitment of financial support ensured the adequate supply of materials and equipment. Foreign sources such as 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’ grass root leadership to gain commercial footing, to transform, and to improve rural communities.

4. Technical experts and consultants extended elemental assistance to 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-ways 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:   (+632) 926-1328 or (+632) 926-1320
Institution's / Project's Website:
Address:   57 NIA Road, Government Center, Diliman
Postal Code:   1001
City:   Quezon City
State/Province:   Metro Manila
Country:   Philippines

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