By Lenie Lectura - March 5, 2017
THE National Transmission Corp. (Transco) is opposed to the prepayment scheme of the concession fee (CF) made by the National Grid Corp. of the Philippines (NGCP) to the Power Sector Assets and Liabilities Management Corp. (PSALM).
In a letter to PSALM Officer in Charge Lourdes Alzona dated February 28, newly appointed Transco President Melvin Matibag said his office “strongly disagrees with PSALM’s action to accept the P57.88- billion prepayment by NGCP”, because this “is not in accordance with the pertinent provisions of the concession agreement” [CA].
NGCP won the concession to operate and manage the grid system in December 2007 for $3.95 billion. The government still owns the assets. It is only NGCP that operates the country’s power-transmission network for 25 years.
NGCP remitted to PSALM P57.88 billion in July 2013 to prepay its 10th to 30th deferred payments for concession fees. The prepayment corresponds to 51.59 percent of the outstanding concession fee as of July 16, 2013.
According to Transco, the prepayment was made contrary to the provision of the CA, which states that “so long that there is no amount due to PSALM or Transco under this agreement [including deferred payments] and other transaction documents that are in arrears, the concessionaire shall have the option to prepay any deferred payment or any portion thereof, including the right to determine which efered payment or portion thereof is being prepaid.”
However, NGCP has an outstanding obligation to Transco amounting to P3.92 billion at the time of the prepayment. Still, the prepayment was allowed and accepted by PSALM, Matibag said.
Based on an “audit observations and recommendations” document, the said prepayment was not approved by the PSALM Board considering that, as alleged by NGCP, it was the PSALM president who requested the payment. NGCP only heeded to help PSALM on its fiscal dilemma. Transco was not consulted either.
The PSALM Board is chaired by the Finance Secretary Emmanuel Ledesma was the PSALM president at the time the prepayment was made.
“Inasmuch as PSALM failed to inform Transco prior to its acceptance of the CF prepayment, Transco was not given the chance to express comments/opinion nor assert its objection on the matter, considering that Transco’s financial condition is the one at stake,” Matibag said.
Matibag said that, while the prepayment was perceived as deduction from the CF receivable from NGCP, Transco views it differently. He said the payment has been disadvantageous to the government considering that it resulted in foregone revenue of P26.07 billion.
“The CF prepayment…as of July 16, 2013 resulted in Transco’s ‘actual loss’ of revenue for P12.62 billion for years 2013 to 2016 and P9.95 billion for years 2017 to 2020 and an estimated loss of revenue for P3.5 billion for years 2021 to 2024, or a total loss of TransCo’s revenue for years 2013 to 2024 in the amount of P26.07 billion due to a reduction n the concession fee interest earnings,” he said.
Should another prepayment will be allowed, Matibag said this will result in additional loss of revenue of P33.52 billion, which will cause an adjusted lump-sum revenue loss for P59.59 billion for years 2013 to 2029 to Transco and to the government attributed by a reduction in the concession fee interest earnings.
As such, Matibag told PSALM in his letter to address the issues of the 2013 prepayment, ensure that Transco will be notified of NGCP’s offer to make another prepayment, and exercise jurisprudence and good governance.