GOVERNMENT-RUN National Electrification Administration (NEA) said over the weekend that it did not over-collect P2.1 billion from the loan amortizations it previously condoned as mandated in the Electric Power Industry Reform Act of 2001 (Epira).
Under Section 60 of the Epira, NEA has both the authority and legal basis to collect the amount of P2.1 billion from the electric cooperatives. The same section also states that all outstanding financial obligations of the electric cooperatives to NEA and other governmental agencies incurred for the purpose of financing the rural electrification shall be assumed by the Power Sector Assets and Liabilities Management Corp. (Psalm).
NEA quoted the Epira as stating that it was “in accordance with the program approved by the President within one year from the effectivity of this Act which shall be implemented and completed within three years from the effectivity of this Act.”
Edita Bueno, NEA administrator, also noted that the Energy Regulatory Commission (ERC) should ensure a reduction in the rates of electric cooperatives commensurate with the resulting savings due to the removal of the amortization payments of their loans.
Bueno added that Section 6, Rule 31 of the Epira’s implementing rules and regulations states that “Nothing in this Rule, however, shall mean that ECs are not obliged to pay the NEA with respect to all outstanding financial obligations assumed by Psalm if the amortization cost components of the EC’s tariff is still collected from consumers.”
Bueno explained that the provision of the law is not self-executory since there are conditions to be met as enumerated in Executive Order 119.
On October 11, 2002, Bueno said the ERC issued guidelines for the implementation of the reduction in rate of the ECs due to the condonation of debt, while on November 15 of the same year, the ERC issued the amended guidelines particularly on the imposition of penalties in case of failure of ECs to file application for rate reduction due to loan condonation.
Pending issuance of a provisional authority by the ERC, according to Bueno, the electric cooperatives continued to charge and collect from their customers the amortization component of their outstanding loans with NEA as incorporated in their respective rates.
Since these loans of ECs are still outstanding until the issuance of provisional authority by ERC, Bueno said that NEA continued to charge and collect interest payments from June 27, 2001, until the respective PAs to reduce rates were issued by the ERC.
NEA said the ERC issued PAs to reduce rates due to loan condonation to each of the 118 electric cooperatives from March 4, 2003, to January 9, 2004, hence the effectivity date of the assumption by Psalm.
Upon the issuance of provisional authorities, Bueno said the rates of the ECs were correspondingly reduced with the removal of the amortization component.
Bueno added that the average rate reduction due to loan condonation amounted to P0.4894 per kilowatt-hour (kWh).
On October 3, 2003, NEA said it entered into an agreement with Psalm for the assumption of Rural Electrification Loans, which should be effective upon the compliance of the following terms and conditions.
The conditions include: each rural electrification loan must be duly recorded in the books of NEA and/or the corresponding creditor government agencies; validated by the Commission on Audit; confirmed by the concerned EC as due and outstanding; and that each rural electrification loan shall be audited for verification by Psalm, in accordance with generally accepted accounting and auditing policies.
Based on the audit, Bueno said the total outstanding financial obligations of ECs assumed by Psalm amounted to P17.98 billion with repayment period of 10 years, interest free.
Psalm said the P2.1-billion collected was applied to interest charged for the loans of electric cooperatives during the period June 27, 2001, until the issuance by the ERC of PA as the loans were considered outstanding, and to residual and restructured loans of the electric cooperatives.
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