Tawi-Tawi’s lone power distributor has secured a debt restructuring agreement to stabilize its finances and ensure reliable electricity in the southernmost province of the Philippines.

In a statement, the Department of Energy (DOE) announced that Tawi-Tawi Electric Cooperative Inc., known as Tawelco, signed a deal with Kaltimex Rural Energy Corp. to address ₱400 million in arrears.

The DOE said the agreement is designed to shore up the cooperative’s balance sheet and improve power services for communities in Bongao, the provincial capital.

Under the terms of the settlement, Tawelco will provide an initial payment of ₱10 million. The remaining debt will be settled through a fixed repayment schedule that includes a three-month grace period for late payments before penalties are applied.

The deal is contingent on Tawelco meeting specific operational benchmarks, including the reduction of system losses and achieving a 100 percent billing rate alongside a 95 percent collection efficiency.

Because Tawelco’s credit standing currently prevents it from securing traditional bank refinancing, the cooperative proposed this restructuring based on its recent gains in payment performance and operational efficiency, according to the DOE.

As part of the broader infrastructure effort, Kaltimex will construct a five-kilometer feeder line to connect new customers near municipal and provincial government offices. Revenue generated from these new connections is earmarked to fund the debt repayment plan.

To further bolster the grid, the DOE has endorsed a request to the Energy Regulatory Commission to increase Tawelco’s allowable capacity band by 10 percent. This move is intended to improve emergency reserve capacity and reduce the cooperative’s reliance on expensive short-term generator leases, mitigating the risk of outages during peak demand periods.

Energy Undersecretary Rowena Guevara said the partnership is critical for improving services in isolated and disadvantaged regions.

Guevara noted that putting obligations on a workable path allows gains to translate into better service for households and stronger support for local enterprises.

Tawelco currently serves approximately 11,000 customers, most of whom are residential users. While Kaltimex has provided power through a diesel plant in the province since 2018, the cooperative has struggled with persistent financial and operational challenges in recent years.