Electricity services in Tawi-Tawi are expected to become more stable after a debt restructuring deal was signed to address long-standing financial problems at the province’s power utility.

The Department of Energy (DOE) welcomed the agreement between Tawi-Tawi Electric Cooperative, Inc. (TAWELCO) and its power supplier, Kaltimex Rural Energy Corp., covering around PHP 400 million in unpaid obligations. The deal was signed on December 15 and was witnessed by DOE Undersecretary Rowena Cristina L. Guevara

The DOE said the agreement is meant to help TAWELCO regain financial stability so it can focus on improving daily electricity service in Bongao, the province’s capital. Tawi-Tawi is one of the country’s most geographically isolated areas and relies on small, localized power systems rather than the main grid.

For TAWELCO, the agreement is significant because unpaid debts have limited its ability to maintain equipment, manage fuel costs, and plan upgrades. By spreading payments over time and linking them to clear performance targets, the restructuring gives the cooperative financial breathing room to focus on day-to-day operations— thus helping reduce outages and improve the consistency of electricity service for residents and businesses in the province.

Under the restructuring plan, TAWELCO will make a PHP 10-million upfront payment and settle the remaining balance through scheduled monthly payments. These payments are tied to performance targets, meaning the cooperative must meet certain operational goals in order to stay on track.

Among these conditions is 100% billing, which means all electricity consumed must be properly recorded and billed, and 95% collection efficiency, or the share of billed amounts that must actually be paid by customers. TAWELCO must also reduce system loss—the electricity lost due to technical issues or illegal connections—to below 10%.

To support repayment without taking on new loans, Kaltimex will also install a 5-kilometer dedicated feeder line, a power line meant to serve new customers near government offices. Revenue from these new connections will help fund TAWELCO’s debt payments.

The DOE said it also endorsed Kaltimex’s request for a 10% increase in TAWELCO’s allowable capacity band, which refers to the amount of electricity the cooperative is allowed to draw from its supplier. This adjustment is intended to support growing demand while maintaining service reliability.

TAWELCO will undergo monthly performance reviews to monitor compliance with the agreement, including progress on infrastructure projects and staff training programs. The DOE said the arrangement could serve as a model for other electric cooperatives facing similar financial and operational challenges.

As the government pushes for more reliable power in off-grid provinces, how effective can debt restructuring and performance-based agreements be in improving electricity service in the country’s most remote areas?

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