May 15, 2019
The Department of Finance (DoF) has ordered the collection of P59.2-billion worth of long overdue obligations of top corporate entities to the state-run Power Sector Assets and Liabilities Management Corp. (Psalm).
In a statement on Tuesday, the DoF said Finance Secretary Carlos Dominguez 3rd had “instructed Psalm to relentlessly pursue collection efforts against these IPPAs and use all remedies available to protect the rights of the government and the Filipino people.”
IPPAs or Independent Power Producer Administrators along with electric cooperatives were reported to have dominated the list of top corporate entities with long overdue accounts with Psalm totalling to P59.2 billion as of December 2018.
Citing a report from Psalm, the DoF said San Miguel Corp.’s South Premiere Power Corp., which administers the Ilijan gas-fired power plant in Batangas City, has the highest unpaid obligation of P19.75 billion. The DoF said Psalm earlier terminated the IPPA, but the termination was enjoined by the courts.
It was followed by Vivant-Sta. Clara Northern Renewables Generation Corp., which owes P3.86 billion to Psalm; Good Friends Hydro Resources Corp., P1.16 billion; FDC Utilities Inc., P1.12 billion; and FDC Misamis Power Corp., P2.56 billion.
Meanwhile, electric cooperatives with the largest unpaid obligation were Lanao del Sur Electric Cooperative (P9.63 billion), Public Utilities Department of Olongapo City (P6.07 billion), now defunct PICOP Resources Corp. (P2.96 billion), Albay Electric Cooperative Inc. (P2.61 billion), Maguindanao Electric Cooperative Inc. (P1.76 billion), Global Steelworks International Inc. (P1.68 billion), Pampanga III Electric Cooperative Inc. (P1.27 billion), Davao del Norte Electric Cooperative Inc. (P1.24 billion), Magellan Cogeneration Inc. (P750.86 million), and former Bacnotan Steel Corp., now known as Union Galvasteel Corp. (P743.68 million).
On the other hand, firms with the largest pending overdue obligations were: Northern Samar Electric Cooperative Inc. (P742.13 million), Sorsogon II Electric Cooperative Inc. (P510.15 million), Samar I Electric Cooperative Inc. (P303.04 million), Zamboanga del Sur II Electric Cooperative Inc. (P275.69 million), and Sorsogon I Electric Cooperative (P206.23 million).
“Due to these overdue accounts, the government through Psalm is constrained to resort to borrowings that the national government guarantees, in order for Psalm to timely fulfill its mandate of liquidating the financial obligations of the National Power Corp.,” Psalm President and Chief executive Officer Irene Joy Garcia was quoted as saying in the report.
She added that in 2018, Psalm borrowed about P23 billion to cover its maturing obligations, and is set to borrow $1.1 billion for obligations maturing this end of May this year. As a result, Garcia said Psalm had to pay interest, guarantee fees and other finance charges of about P2.62 billion per year.
Had the IPPAs and electric cooperatives paid, the state-owned firm would not incur this much additional costs, she added. “All these borrowing costs could have otherwise been utilized by the government for the construction of public school classrooms or to build roads and bridges,” Dominguez, who chairs Psalm’s board of directors, said.
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