Electricity rates to go up by 30 centavos soon

By Jess Diaz (philstar.com) Updated October 11, 2010 04:20 PM
MANILA, Philippines – Electricity users will have to brace themselves for more rate increases soon.
The public will pay for P470 billion of the P930-billion combined debts of the state-owned National Power Corp. (Napocor) and the Power Sector Assets and Liabilities Management (PSALM) Corp., Cavite Rep. Joseph Emilio Abaya has told a House budget hearing.
Quoting officials of the two agencies, Abaya said people would pay for Napocor’s and PSALM’s obligations in the form of higher electricity rates.
He said the plan is to make electricity users pay an additional 30 centavos per kilowatt-hour over a period of at least 16 years.
Abaya did not say, nor was he asked, what would happen to the balance of the P930-billion combined indebtedness of the two agencies.
Under the Electric Power Industry Reform Act (Epira) of 2001, Napocor was to be privatized and its assets were to be sold to pay for its indebtedness.
Epira created PSALM to do the privatization and asset sale.
According to Eastern Samar Rep. Ben Evardone, PSALM has already sold 91.8 percent of the Napocor’s assets.

“A total of $10.6 billion was generated from the proceeds of privatization. This amount includes $3.394 billion from the sale of 25 generating plants and $3.950 billion for the concession for its transmission facilities,” he said in a recent privilege speech.
Additionally, PSALM has obtained $2.8 billion in new loans that it is supposed to use to pay for Napocor’s debts, he said.
“PSALM has generated $10.6 billion from privatization and $2.8 billion in new loans for a total of $13.4 billion, but it has paid only $1.3 billion of Napocor’s indebtedness. Where did the $12.1 billion go?” he asked.
Evardone, a former journalist-turned-governor-turned-lawmaker, said even the Energy Regulatory Commission (ERC), where PSALM has pending four petitions for power rate increases, is trying to inquire where the power agency has spent the money.
“They have refused to tell the ERC where the privatization and loan proceeds went supposedly because this information is confidential. I think that disclosing this information could lead to a lot of irregularities being exposed,” he said.
He urged President Aquino to order PSALM to be more transparent about its finances and to withdraw its electricity rate increase petitions until it could sufficiently explain how it spent its privatization and loan proceeds.
At the same time, he asked the ERC not to act on these petitions.
He said consumers should no longer be made to pay for the debts of Napocor since the $10.6 billion realized from the sale of its assets was more than enough to pay for such indebtedness.
He revealed that in 2001, when Epira was enacted, Napocor’s debts stood at $9.3 billion.
“Under Epira, taxpayers, through the national government, immediately absorbed P200 billion or about $4 billion of those debts, leaving a balance of $5.3 billion,” he said.
He said if PSALM paid the balance of Napocor’s indebtedness using the $10.6 billion generated from the sale of its assets, the government would still be left with a surplus of $5.3 billion.
 “But there is no surplus. They even contracted new loans. I think our people will not accept new rounds of increases in electricity rates unless they are informed and satisfied where billions of dollars in privatization proceeds and new loans went,” he said.
Evardone has filed a resolution seeking a House inquiry into how these funds were used. Other congressmen have filed similar resolutions.
However, the House energy committee chaired by Batanes Rep. Henedina Abad, has not called a hearing on these measures. Abad is the wife of Budget Secretary Florencio Abad.Electricity users will have to brace themselves for more rate increases soon.
The public will pay for P470 billion of the P930-billion combined debts of the state-owned National Power Corp. (Napocor) and the Power Sector Assets and Liabilities Management (PSALM) Corp., Cavite Rep. Joseph Emilio Abaya has told a House budget hearing.
Quoting officials of the two agencies, Abaya said people would pay for Napocor’s and PSALM’s obligations in the form of higher electricity rates.
He said the plan is to make electricity users pay an additional 30 centavos per kilowatt-hour over a period of at least 16 years.
Abaya did not say, nor was he asked, what would happen to the balance of the P930-billion combined indebtedness of the two agencies.
Under the Electric Power Industry Reform Act (Epira) of 2001, Napocor was to be privatized and its assets were to be sold to pay for its indebtedness.
Epira created PSALM to do the privatization and asset sale.
According to Eastern Samar Rep. Ben Evardone, PSALM has already sold 91.8 percent of the Napocor’s assets.
 “A total of $10.6 billion was generated from the proceeds of privatization. This amount includes $3.394 billion from the sale of 25 generating plants and $3.950 billion for the concession for its transmission facilities,” he said in a recent privilege speech.
Additionally, PSALM has obtained $2.8 billion in new loans that it is supposed to use to pay for Napocor’s debts, he said.
 “PSALM has generated $10.6 billion from privatization and $2.8 billion in new loans for a total of $13.4 billion, but it has paid only $1.3 billion of Napocor’s indebtedness. Where did the $12.1 billion go?” he asked.
Evardone, a former journalist-turned-governor-turned-lawmaker, said even the Energy Regulatory Commission (ERC), where PSALM has pending four petitions for power rate increases, is trying to inquire where the power agency has spent the money.
 “They have refused to tell the ERC where the privatization and loan proceeds went supposedly because this information is confidential. I think that disclosing this information could lead to a lot of irregularities being exposed,” he said.
He urged President Aquino to order PSALM to be more transparent about its finances and to withdraw its electricity rate increase petitions until it could sufficiently explain how it spent its privatization and loan proceeds.
At the same time, he asked the ERC not to act on these petitions.
He said consumers should no longer be made to pay for the debts of Napocor since the $10.6 billion realized from the sale of its assets was more than enough to pay for such indebtedness.
He revealed that in 2001, when Epira was enacted, Napocor’s debts stood at $9.3 billion.
“Under Epira, taxpayers, through the national government, immediately absorbed P200 billion or about $4 billion of those debts, leaving a balance of $5.3 billion,” he said.
He said if PSALM paid the balance of Napocor’s indebtedness using the $10.6 billion generated from the sale of its assets, the government would still be left with a surplus of $5.3 billion.
“But there is no surplus. They even contracted new loans. I think our people will not accept new rounds of increases in electricity rates unless they are informed and satisfied where billions of dollars in privatization proceeds and new loans went,” he said.
Evardone has filed a resolution seeking a House inquiry into how these funds were used. Other congressmen have filed similar resolutions.
However, the House energy committee chaired by Batanes Rep. Henedina Abad, has not called a hearing on these measures. Abad is the wife of Budget Secretary Florencio Abad.