May 15, 2019 | 12:30 am By Victor V. Saulon Sub-Editor
SOUTH PREMIERE Power Corp. (SPPC), a
unit of listed conglomerate San Miguel Corp. (SMC), topped the list of entities
with the biggest unpaid loans to the government agency tasked to privatize
state energy assets, the Finance department said on Tuesday.
SPPC and other independent power
producer administrators (IPPA), along with electricity cooperatives, dominate
the list of corporate entities with long overdue accounts with the Power Sector
Assets and Liabilities Management Corp. (PSALM) amounting to a combined P59.23
billion as of December 2018, the Department of Finance (DoF) said in a
statement.
The overdue debts of the SMC
subsidiary amounts to P19.75 billion, it said. A representative of the company
said the issue surrounding the supposed unpaid debts is still in the court. The
representative also said SMC President and Chief Operating Officer Ramon S. Ang
was out of the country, but a response is being prepared.
A report by PSALM to Finance
Secretary Carlos G. Dominguez III, who chairs the firm’s board of directors, showed
that several IPPAs have unpaid accounts of P28.46 billion as of end-2018, the
DoF statement said. It said some of the IPPAs are contesting the amounts due in
courts or in arbitral tribunals.
Many of the accounts were
transferred by the National Power Corp. (Napocor) to PSALM when Republic Act
No. 9136, or the Electric Power Industry Reform Act of 2001 (EPIRA), was
enacted.
IPPAs are qualified private entities
that manage output from the energy conversion and power purchase agreements
that Napocor entered into with the independent power producers. They are
appointed through public biddings conducted by PSALM.
SPPC led by Elenita G. Go, its
president, administers the 1,277-megawatt Ilijan gas-fired power plant in
Batangas City. PSALM earlier terminated the IPPA, but the move was enjoined by
the courts.
“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 [Napocor],” said Irene Joy
B. Garcia, PSALM president and chief executive officer.
She said last year, the firm
borrowed about P23 billion to pay its maturing obligations, and that it is set
to borrow $1.1 billion for obligations maturing by the end of May. As a result,
it had to pay interest, guarantee fees and other finance charges of about P2.62
billion a year. Had the IPPAs and electric cooperatives paid, PSALM would not
incur the additional costs, she added.
In the statement, Mr. Dominguez said
“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.” It added that he instructed PSALM to “relentlessly” pursue collection
efforts against the IPPAs and use all available remedies to protect the rights
of the government and the Filipino people.”
DoE said Vivant-Sta. Clara Northern
Renewables Generation Corp. (Vivant-Sta. Clara), formerly owned by Vivant
Energy and Sta. Clara Power Corp., owes P3.86 billion to PSALM, which awarded
it an IPPA contract for the Bakun Hydroelectric Power Plant in Ilocos Sur. It
also said Vivant-Sta. Clara filed a petition for rehabilitation.
The renewable energy company was
bought by North Renewable Energy Corp. in October last year, but the DoF said
despite the change in ownership, no payment had been made to PSALM for its
overdue accounts.
Sought for comment, Shem Jose W.
Garcia, Vivant assistant vice-president for corporate communication, said the
debts piled up because of the combination of low prices at the wholesale
electricity spot market, and the dry weather. The hydro project is reliant on
the flow of water, he added.
“We knew that was an issue when we
sold it so the new buyers were aware,” Mr. Garcia said by phone.
The DoF said Good Friends Hydro
Resources Corp. of Lucio Lim Jr. has yet to pay PSALM P1.16 billion, while FDC
Utilities, Inc. led by Juan Eugenio Roxas as its president-CEO and 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., a subsidiary of FDC Utilities, also owes PSALM
P2.56 billion, as the previous IPPA for the Mindanao I and II geothermal power
plants, it added.
The PSALM report also listed 10
electric cooperatives and industries with unpaid obligation to PSALM at a
combined total of P28.74 billion as of end-2018. The Lanao del Sur Electric
Cooperative (Lasureco) has the highest and longest overdue account at P9.63
billion that dates back 16 years, the report said.
Edgardo R. Masongsong, administrator
of the National Electrification Administration (NEA), said in a text message
that as far as electric cooperatives are concerned, only PSALM has the data and
is familiar with what is due it.
He said in most cases, those in
distress, as listed by the DoF, encounter difficulties in settling their
obligations with the company.
He said in the case of Lasureco,
what it owes came from a principal amount of P3 billion.
“The P6 billion or thereabouts can
be attributed to interests and surcharges compounded thru the years,” Mr.
Masongsong said.
“Although Lasureco owes that much to
PSALM, it has no intentions of reneging on its obligations and recognizes that
these were long overdue. We at NEA believe that all these electric cooperatives
need are proper assistance and enough capacitation which the present NEA
extends to rehabilitate ECs so that in the near future, these indebtedness to
PSALM can finally be settled.”
Janeene D. Colingan, executive
director and general manager of the Philippine Rural Electric Cooperative
Association, Inc., did not respond to a query via text or phone on Tuesday.
Department of Energy Assistant Secretary
Redentor E. Delola, who was recently in Mindanao to oversee an issue on an
electric cooperative, also did not respond.
PSALM said Public Utilities
Department of Olongapo City, although no longer a client, still owes P6.07
billion in obligations, representing more than nine years of overdue power
bills, over 10 years of unpaid value-added tax (VAT) payments, and five years
of penalties and interest.
It is second on the list of the top
10 entities consisting of electricity cooperatives and industries with long
overdue accounts with PSALM.
PICOP Resources Corp., a defunct
company previously owned by TP Holdings, Inc. is third with pending overdue
accounts since 2008, which now amounts to P2.96 billion.
Albay Electric Cooperative, Inc. has
P2.61 billion of unpaid power bills, VAT and interest and penalties. Its unpaid
account dates back to 2006. It is no longer PSALM’s customer and is now known
as the Albay Power Energy Corp.
Others on the list are Maguindanao
Electric Cooperative, Inc., which has P1.76 billion in unpaid obligations of
more than 10 years of overdue power bills; Global Steelworks International,
Inc., now known as Global Steel Philippines, a subsidiary of Global Steel
Holdings Ltd., with an unpaid account since 2009 and overdue power bills
amounting to P1.68 billion.
In seventh place is Pampanga III
Electric Cooperative Inc., with P1.27 billion in unpaid obligations, with at
least four years overdue in its restructured account and more than two years of
interest and penalties. The cooperative has requested for a restructuring of
its account, PSALM said.
Davao del Norte Electric Cooperative
Inc. is next with P1.24 billion in overdue obligations. PSALM said negotiations
are ongoing on the coops overdue restructured account and power bills.
The rest are the defunct Magellan
Cogeneration, Inc., which used to be controlled by Covanta Energy and has
P750.86 million in unpaid obligations; followed by the former Bacnotan Steel
Corp., now known as Union Galvasteel Corp. of the Phinma Corp., with P743.68
million.
PSALM said that besides the Lanao
del Sur cooperative and the other electric cooperatives on the top 10 list,
five other electric cooperatives were among the firms with the largest pending
obligations.
These are Northern Samar Electric
Cooperative Inc. with P742.13 million in overdue line rentals, restructured
account, power bills and VAT. A revised restructuring scheme was signed with
the coop in November last year, PSALM said.
Also on the list is Sorsogon II
Electric Cooperative Inc. with P510.15 million in overdue power bills,
restructured account, VAT and interest and penalties. Samar I Electric
Cooperative Inc. with P303.04 million in unpaid restructured account, power
bills, VAT and line rentals. A revised restructuring scheme was signed by the
coop with PSALM last Nov. 29, the report said.
Zamboanga del Sur II Electric
Cooperative Inc. has an overdue account since 2017 that now amounts to P275.69
million. Sorsogon I Electric Cooperative has unpaid obligations of P206.23
million to PSALM with overdue restructured account. PSALM said it has
negotiations with the coop for the settlement of its outstanding obligations.
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