Manila BulletinArticle by: Myrna M. VelascoPublished: March 1, 2013
PSALM is the anointed UC Fund Administrator, but the entire industry is fidgety at prospects that the company may messed up again on its finances and will commit Filipino consumers to higher pass-on charges in the future.
With the regulator-approved universal charge (UC) for stranded contract costs that will flow into the coffers of the Power Sector Assets and Liabilities Management Corporation (PSALM), power industry stakeholders are urging the Department of Finance (DOF) to enforce strict monitoring on the utilization of the amounts collected.
Since the DOF was the “real force” which pushed for the approval of the UC and it is also the entity borrowing money for PSALM, there are even suggestions from the industry that the UC collections from consumers be remitted instead to the finance department.
PSALM president Emmanuel R. Ledesma Jr. noted that the approved universal charge pass-on will bring the company revenues of up to P11 billion annually.
The total cost recoveries approved by the ERC had been P53.851 billion but only for stranded contract costs. The application for stranded debts recovery was effectively junked by the industry regulator.
Ledesma justified that the collection of UCs due to the company’s stranded liabilities was authorized under the Electric Power Industry Reform Act (RPIRA). The law, however, specified that these must be established as prudently-incurred costs and not just arising from the questionable mix-up of accounting in PSALM’s financial obligations.
The PSALM chief executive added that “the proponents of the EPIRA have recognized the fact that the privatization proceeds will not be enough to cover NPC’s financial obligations.”
He similarly emphasized that PSALM “continues to incur losses from the operations of its remaining generating assets and the IPP (independent power producer) plants.”
Nevertheless, the real story circulating in the industry was that PSALM failed in maximizing the proceeds it could fetch from the privatization of some assets; because the intent of the management then was just to divest the assets because they have been rewarding themselves with hefty bonuses on a “per- plant-sale.”
And sans any other income source aside from the privatization proceeds, PSALM would not have any alternative of plugging cost shortfalls but to collect it from the electricity consumers. source
Since the DOF was the “real force” which pushed for the approval of the UC and it is also the entity borrowing money for PSALM, there are even suggestions from the industry that the UC collections from consumers be remitted instead to the finance department.
PSALM president Emmanuel R. Ledesma Jr. noted that the approved universal charge pass-on will bring the company revenues of up to P11 billion annually.
The total cost recoveries approved by the ERC had been P53.851 billion but only for stranded contract costs. The application for stranded debts recovery was effectively junked by the industry regulator.
Ledesma justified that the collection of UCs due to the company’s stranded liabilities was authorized under the Electric Power Industry Reform Act (RPIRA). The law, however, specified that these must be established as prudently-incurred costs and not just arising from the questionable mix-up of accounting in PSALM’s financial obligations.
The PSALM chief executive added that “the proponents of the EPIRA have recognized the fact that the privatization proceeds will not be enough to cover NPC’s financial obligations.”
He similarly emphasized that PSALM “continues to incur losses from the operations of its remaining generating assets and the IPP (independent power producer) plants.”
Nevertheless, the real story circulating in the industry was that PSALM failed in maximizing the proceeds it could fetch from the privatization of some assets; because the intent of the management then was just to divest the assets because they have been rewarding themselves with hefty bonuses on a “per- plant-sale.”
And sans any other income source aside from the privatization proceeds, PSALM would not have any alternative of plugging cost shortfalls but to collect it from the electricity consumers. source
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