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MANILA, Philippines - The government may use the receivables from the concession contract of the National Grid Corporation of the Philippines (NGCP) to bring down the universal charge (UC) that would be collected from electricity consumers, a Power Sector Assets and Liabilities Management Corp. (PSALM) official said.
PSALM spokesperson Julie Domino said they are currently exploring all options that would help cushion the impact of the UC on consumers.
She admitted that the government is pushing for the review of all existing power contracts, including that of the concession of the NGCP, to be able to come up with a lesser amount of UC on electricity consumers.
For the next 15 years, PSALM, an entity tasked to handle the finances and the privatization of the assets of the National Power Corp. (Napocor), will be able to collect a total of $5.87 billion with interest from the lease contract of National Transmission Corp. (TransCo) to NGCP.
With an offer of $3.95 billion, NGCP won the bid to run and operate the country’s power transmission highway in 2008. It assumed the operations of TransCo in January 2009.
Domino explained that if they would be able to sell the receivables ahead of the scheduled payment of the concessionaire, this may help in the efforts to lower the UC to be paid by consumers.
Recently, PSALM sought the approval of the Energy Regulatory Commission to collect a total of 39 centavos per kilowatthour (kwh) in the form of a UC to recover Napocor’s stranded debts (SD) and stranded contract costs (SCC) incurred over the years.
The EPIRA (Electric Power Industry Reform Act) provides that a universal charge will be imposed on all electricity end-users for the payment of Napocor’s SD and SCC.
The EPIRA defines SD as any unpaid financial obligation of Napocor that has not been liquidated by the proceeds from the privatization of the generating firm’s assets, and SCC as the excess of the contracted cost of electricity under eligible contracts over the actual selling price of the contracted energy output of these contracts in the market.
According to Domino, PSALM is now talking with various banks and financial institutions to look at the possibility of selling these receivables of TransCo.
She said government may not need to get the approval of NGCP on this scheme.
“We may give them notice. The decision to carry out this scheme would be decided upon by PSALM and the banks or financial institutions that would be buying these receivables at a discounted rate,” she said.
Domino said PSALM has been exhausting all efforts to lessen the impact of the UC.
She pointed out that selling all the Napocor assets and contracts would help lower the UC.
“What we want to do at PSALM is to sell all the assets of Napocor, it will lower the UC,” she said, noting that there are delays in the privatization of some assets and contracts – Unified Leyte geothermal complex and Agus-Pulangi hydropower plants – that are being subjected to reviews by lawmakers.
She said they are also converting most of their dollar loans to peso to save on foreign exchange losses.
PSALM, she said, is also asking Congress to lengthen its corporate life to stretch the payment of UC from its proposed 15 years to 25 years. The lifespan of PSALM, created under the EPIRA, will be up to 2026.
The PSALM official said these debts of Napocor, which were used to put up power plants that helped ease the power crisis in the 19990s, will have to be paid.
“We are urging the public to understand that these debts of Napocor would have to be eventually settled by the government. The government will need money to pay for it and the money would come from the people in any other form such as new tariff and/or new taxes,” she said.
“We need to do something about these debts (of Napocor) so we won’t be paying more in the future. The universal charge is a social payback to the efforts of the government to provide affordable power rates and to resolve the power crisis that virtually crippled the country’s economy in the past.”
PSALM spokesperson Julie Domino said they are currently exploring all options that would help cushion the impact of the UC on consumers.
She admitted that the government is pushing for the review of all existing power contracts, including that of the concession of the NGCP, to be able to come up with a lesser amount of UC on electricity consumers.
For the next 15 years, PSALM, an entity tasked to handle the finances and the privatization of the assets of the National Power Corp. (Napocor), will be able to collect a total of $5.87 billion with interest from the lease contract of National Transmission Corp. (TransCo) to NGCP.
With an offer of $3.95 billion, NGCP won the bid to run and operate the country’s power transmission highway in 2008. It assumed the operations of TransCo in January 2009.
Domino explained that if they would be able to sell the receivables ahead of the scheduled payment of the concessionaire, this may help in the efforts to lower the UC to be paid by consumers.
Recently, PSALM sought the approval of the Energy Regulatory Commission to collect a total of 39 centavos per kilowatthour (kwh) in the form of a UC to recover Napocor’s stranded debts (SD) and stranded contract costs (SCC) incurred over the years.
The EPIRA (Electric Power Industry Reform Act) provides that a universal charge will be imposed on all electricity end-users for the payment of Napocor’s SD and SCC.
The EPIRA defines SD as any unpaid financial obligation of Napocor that has not been liquidated by the proceeds from the privatization of the generating firm’s assets, and SCC as the excess of the contracted cost of electricity under eligible contracts over the actual selling price of the contracted energy output of these contracts in the market.
According to Domino, PSALM is now talking with various banks and financial institutions to look at the possibility of selling these receivables of TransCo.
She said government may not need to get the approval of NGCP on this scheme.
“We may give them notice. The decision to carry out this scheme would be decided upon by PSALM and the banks or financial institutions that would be buying these receivables at a discounted rate,” she said.
Domino said PSALM has been exhausting all efforts to lessen the impact of the UC.
She pointed out that selling all the Napocor assets and contracts would help lower the UC.
“What we want to do at PSALM is to sell all the assets of Napocor, it will lower the UC,” she said, noting that there are delays in the privatization of some assets and contracts – Unified Leyte geothermal complex and Agus-Pulangi hydropower plants – that are being subjected to reviews by lawmakers.
She said they are also converting most of their dollar loans to peso to save on foreign exchange losses.
PSALM, she said, is also asking Congress to lengthen its corporate life to stretch the payment of UC from its proposed 15 years to 25 years. The lifespan of PSALM, created under the EPIRA, will be up to 2026.
The PSALM official said these debts of Napocor, which were used to put up power plants that helped ease the power crisis in the 19990s, will have to be paid.
“We are urging the public to understand that these debts of Napocor would have to be eventually settled by the government. The government will need money to pay for it and the money would come from the people in any other form such as new tariff and/or new taxes,” she said.
“We need to do something about these debts (of Napocor) so we won’t be paying more in the future. The universal charge is a social payback to the efforts of the government to provide affordable power rates and to resolve the power crisis that virtually crippled the country’s economy in the past.”
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