Being the lead agency overseeing regional power utilities, the National Electrification Administration (NEA) urged the country’s electric cooperatives (ECs) to procure insurance cover for their critical assets – especially the facilities that are vulnerable to damage or technical glitches when walloped by extreme weather conditions and other natural disasters.

Via a memorandum signed by Deputy Administrator for Technical Services Ernesto Silvano, Jr. on September 10 this year, the electrification agency sought information and warranted data from ECs that are under its watch on insurance policy for their technical and operational facilities.

Silvano’s memorandum primarily stipulated that “in the aftermath of a disaster/calamity, the cost of rehabilitation/restoration of the damaged assets can be substantial,” hence, he opined that “insurance helps ensure that assets are quickly restored or replaced, reducing downtime and maintaining operational efficiency.”

As specified by NEA, the ECs’ critical infrastructure network that could be de-risked with insurance policy shall include: generation and sub-transmission facilities; distribution assets such as substation, feeder units, protection equipment, transformers, among others; buildings and facilities; warehouses; vehicles; information technology (IT) equipment; as well as other related properties.

“The ECs are requested to submit related documents before the NEA Disaster Risk Reduction and Management Department (DRRMD) on or before September 20, 2024,” the memorandum stated.

NEA primarily highlighted the importance of “having vital equipment protected to ensure uninterrupted electricity services for the ECs’ member-consumer-owners in their respective coverage areas.”

The agency expounded that the mandate on insurance policy would be part of the six pillars of the Resiliency Compliance Plan (RCP), as anchored on the Department of Energy’s 2022 Circular on “Disaster Risk Financing and Insurance.”

It is worth noting that in times of calamities, such as major typhoons and earthquakes, the infrastructure assets of the electric cooperatives are often the ones susceptible to impairments – and it would typically take longer time also to bring back service to their customers.

The geographic isolation of many of the ECs similarly renders disaster-linked recovery efforts extremely challenging as well as costly and time-consuming.

The conventional recourse for the power utilities is to either seek allocation from the Electric Cooperatives Emergency and Resiliency Fund (ECERF) but may take time before budget could be released; or they will tap loans from the NEA.

The proposed insurance cover for their critical assets, though this is primordially viewed as just another line item in the budget, could actually serve as added ‘lifeline’ for the ECs; and may make a difference either for their long term survival or eventual collapse.