PSALM rejects P57.88-B prepayment from NGCP

January 18, 2018  By Victor V. Saulon, Sub-Editor

http://bworldonline.com/psalm-rejects-p57-88-b-prepayment-ngcp/

STATE-RUN Power Sector Assets and Liabilities Management Corp. (PSALM) said the P57.88-billion “prepayment” made by privately owned National Grid Corporation of the Philippines (NGCP) is not valid, in a rejection of an arrangement previously agreed by the two parties under the previous administration.

In a letter addressed to NGCP President and Chief Executive Officer Henry Sy, Jr., PSALM has informed the grid operator that its “remittance” of P57,883,053,062.96 made on July 15, 2013 “is not a valid prepayment under the CA (concession agreement) since at the time of payment, NGCP has outstanding obligations to the National Transmission Corp. (TransCo).”

“Accordingly, the attached Deferred Payment Amortization Schedule prior to the 15 July 2013 remittance would apply, such that, the maturities under the CA from January 2014 to January 2018 were settled using the P57.88-billion remittance of NGCP,” the PSALM letter read.

NGCP’s franchise came after the country passed Republic Act 9136 in 2001 or the “Electric Power Industry Reform Act of 2001” (EPIRA), which paved the way for the sale of government energy assets.

The law separated the different components of the sector, including power transmission, which was spun off to state agency TransCo ahead of its turnover to the private sector through concession.

Unlike outright sale, the concession agreement allowed the government to keep ownership of the transmission assets through TransCo. Payment of the concession fee is through PSALM.

Sought for comment, NGCP spokesperson Cynthia P. Alabanza said in a text message: “NGCP conducts its business in full compliance with its franchise under RA 9511, the concession agreement, and all laws, rules, regulations and other lawful issuances.”

“We are in receipt of a letter from PSALM on this issue, and we have referred the same to our lawyers for further study,” she added.

RA 9511 is the law that granted NGCP a franchise to engage in the business of conveying or transmitting electricity through a high voltage backbone system of interconnected transmission lines, substations and related facilities.

Melvin A. Matibag, TransCo president and chief executive officer, previously said he was against the prepayment because it deprives the government of interest earnings for the fees, which are paid twice yearly for the duration of the concession agreement.

NGCP won the 25-year concession in 2007 to operate the country’s power transmission network after an open, public and competitive bidding process. It officially started operations as power transmission service provider in 2009.