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REFC stands for Rural Electrification Financing Corporation. It is the financing arm of the Philippine Electric Cooperatives (ECs). It is a privately-owned stock corporation aimed to provide the ECs with financial assistance to improve their services to their member consumers through an efficient and reliable electric power distribution system.
It was conceived in August 2001 when a pioneering group of Electric Cooperative leaders saw the need for an alternative financing organization to provide for the financial needs of the ECs. This group of ECs were the following; INEC, ISECO, PANELCO III, CAGELCO I, CAGELCO II, ISELCO I, BATELEC I, ILECO I, NOCECO, CEBECO II, BOHECO I, LEYECO II, LEYECO IV, LEYECO V and ZAMCELCO. With an initial paid-up capital of PHP 30 million, REFC was eventually registered with the Philippine Securities and Exchange Commission (SEC) on August 31, 2001 under Registration No. A200100734. It started operating on September 2002.
REFC was created for the purpose of strengthening the financial resources of the ECs in order for them to sustain the capital investment requirement to fund their various projects in response to the challenge of becoming viable and competitive electric distribution utilities in the deregulated environment as dictated by Republic Act 9136 otherwise known as the Electric Power Industry Reform Act of 2001.
The sources of funds of REFC comes from the equity investments of the Investor-ECs, as well as the equity contributions of interested partners such as NRECA Electricity for Progress (NEP) who have to date invested up to PHP 60 million. REFC's capital structure calls for the accomodation of prospective financing entities interested to invest into REFC.
The Energy Regulatory Commission (ERC) in its memorandum dated December 3, 2003 has authorized the ECs to invest into REFC up to one-fifth (1/5) of their reinvestment funds to provide them with alternative and additional source of funding to support their capital expenditure requirements.
REFC caters to the financial needs of the ECs by providing them with an assured source of funds at the lowest possible lending rate. REFC also provides technical assistance to ECs in terms of evaluating and prioritizing investment projects and assist in the documentation and processing of their loan applications.
REFC will grant loans exclusively to member-ECs to fund their financially viable projects.</p>
First, they should become a member of REFC by putting in equity investment or entering into an investment agreement with REFC.