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Fix the Psalm accounts once and for all

May 16, 2019

THE Department of Finance (DoF), through Secretary Carlos Dominguez 3rd, has put its foot down and demanded the collection of more than P59 billion in unpaid obligations, some dating back more than a decade, from independent power producers and electric cooperatives. The order is the perfect occasion to fix the chronic financial mess and drain on public resources — which the Power Sector Assets and Liabilities Management Corp. (Psalm) represents — once and for all.

Most of the overdue accounts were transferred from the National Power Corp. (Napocor) to Psalm when the Electric Power Reform Act (Epira) of 2001 was enacted. These are unpaid loans or bills for electricity supply, plus interest and penalties. Psalm was created by the Epira to manage the divestment of government-owned electricity infrastructure, including generation plants and distribution facilities.

Finance Secretary Dominguez serves as the chairman of Psalm’s board of directors.

The largest delinquent account belongs to South Premiere Power Corp. (SPPC), a unit of conglomerate San Miguel Corp. that owes Psalm P19.75 billion. SPPC is an independent power producer administrator (IPPA) that manages — in this case through a hired operator — the 1,277-megawatt Ilijan gas-generation plant in Ilijan, Batangas City. IPPAs are qualified private entities that manage energy conversion and power purchase agreements that Napocor made with independent power producers prior to the implementation of the Epira.

Also mentioned as other IPPAs with large delinquent debts to Psalm are Vivant-Sta. Clara Northern Renewables Corp. (P3.86 billion), which runs the Bakun hydroelectric plant in Ilocos Sur; Good Friends Hydro Resources Corp. (P1.16 billion); and Filinvest unit FDC Utilities Inc. (P1.12 billion), which, along with Good Friends, manages the Unified Leyte Geothermal Power Plants.

According to Psalm, there are also 10 electric cooperatives and industrial customers who have unpaid bills for electricity supply totaling P29.74 billion as of the end of 2018. The worst of these is that of the Lanao del Sur Electric Cooperative, whose P3-billion overdue bill has gone unpaid in 16 years, and has ballooned to P9.63 billion due to interest and penalties.

For ordinary consumers who face the threat of penalty charges and even disconnection for failing to pay their own electric bills on time, the revelation of such massive debts going unpaid for years is infuriating. It is particularly insulting that these delinquent debts are owed to the public coffers as well. While the bills are unpaid, Psalm routinely has to borrow money to meet its own debt obligations. The agency borrowed P23 billion last year, and will borrow a further $1.1 billion this month to meet obligations that will reach their maturity date at the end of the month.

This sorry state of affairs has gone on for years, almost from the moment Psalm came into being. In effect, consumers are being penalized by it twice: First, the delinquent debts turn up on monthly electric bills as “stranded debt costs,” meaning that every electricity consumer is paying out of pocket for costs Psalm incurs in not being able to pay all of Napocor’s old obligations. Second, the huge amounts of money Psalm continually borrows to remain afloat financially incur costs that are taken from the national budget, and are, therefore, unavailable for other more useful programs and projects.

Secretary Dominguez has ordered Psalm to pursue repayment of the delinquent accounts “relentlessly.” We hope that Psalm takes that instruction literally, and is supported in its efforts by the courts and other involved agencies. The Filipino people have borne the costs of bad management by others for far too long.

Credit belongs to : www.manilatimes.net


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