DoF: Power firms, co-ops owe P59b

posted May 14, 2019 at 09:25 pm
by  Julito G. Rada
Several independent power producer administrators and electric cooperatives owe P59.23 billion to Power Sector Assets and Liabilities Management Corp., a report submitted to Finance Secretary Carlos Dominguez III shows.

The Finance Department said in a statement that IPPAs and electric coops dominated the list of the top corporate entities with long overdue accounts with PSALM amounting to a combined P59.23 billion as of December 2018. 

Many of these accounts were transferred by National Power Corp. to PSALM by virtue of Republic Act No. 9136 in 2001.

A report by PSALM to Dominguez, who chairs the state-run firm’s board of directors, showed that several IPPAs had pending overdue accounts amounting to P28.46 billion as of December 2018.  Some of the IPPAs are contesting the amounts in courts or in arbitral tribunals.

The PSALM report also listed 10 electric cooperatives and industries with the largest unpaid obligation due to PSALM with a combined total of P28.74 billion as of December last year.

San Miguel Corp.’s South Premiere Power Corp., which administers the Ilijan gas-fired power plant in Batangas City, has the highest unpaid obligation to PSALM in the sum of P19.75 billion. PSALM earlier terminated the IPPA, but this was stopped by the court.

Lanao del Sur Electric Cooperative has the highest overdue account among electric cooperatives amounting to P9.63 billion dating back 16 years, according to the report. 

The Public Utilities Department of Olongapo City, although no longer a PSALM client, owes P6.07 billion in obligations representing over nine years of overdue power bills, more than 10 years of unpaid value-added tax payments and five years of penalties and interest. 

Vivant-Sta. Clara Northern Renewables Generation Corp., formerly owned by Vivant Energy and Sta. Clara Power Corp., owes P3.86 billion to PSALM.  The company was awarded an IPPA contract for the Bakun Hydroelectric Power Plant in Ilocos Sur. 

Vivant-Sta. Clara filed a petition for rehabilitation.  It was recently purchased by North Renewable Energy Corp.  Data showed that despite the change in ownership, no payment has been made to PSALM for the overdue accounts.     

Good Friends Hydro Resources Corp. of Lucio Lim Jr. also has to settle P1.16 billion, while FDC Utilities Inc., a subsidiary of Filinvest Development Corp., owes P1.12 billion. Both IPPAs were involved with the contract to administer the Unified Leyte Geothermal Power Plants. 

A Filinvest Utilities subsidiary, the FDC Misamis Power Corp., also owes PSALM some P2.56 billion as the previous administrator for the Mindanao I and II Geothermal Power Plants.  

“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.,” said PSALM president and chief executive Irene Joy Garcia. 

“In fact, in 2018, PSALM borrowed about P23 billion to cover its maturing obligations, and PSALM is set to borrow $1.1 billion for obligations maturing this end of May 2019,” she said. 

She said that as a result, PSALM had to pay interest, guarantee fees and other finance charges of about P2.62 billion per year. She said that if the IPPAs and electric cooperatives had paid their obligations, PSALM would not incur the additional costs.

Dominguez said that “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 instructed PSALM to relentlessly pursue collection efforts against the IPPAs and use all remedies available to protect the rights of the government and the Filipino people.

Topics: Department of Finance , DoF , Finance Secretary Carlos Dominguez III , Power Sector Assets and Liabilities Management Corp. , PSALM
COMMENT DISCLAIMER: Reader comments posted on this Web site are not in any way endorsed by The Standard. Comments are views by thestandard.ph readers who exercise their right to free expression and they do not necessarily represent or reflect the position or viewpoint of thestandard.ph. While reserving this publication’s right to delete comments that are deemed offensive, indecent or inconsistent with The Standard editorial standards, The Standard may not be held liable for any false information posted by readers in this comments section.