Petilla reviews NGCP prepayment terms

Manila Bulletin 
By Myrna M. Velasco 
Published: August 28, 2013 
Energy Secretary Carlos Jericho L. Petilla will be scrutinizing the details of the prepayment arrangement that the Power Sector Assets and Liabilities Management Corporation (PSALM) has entered into with the National Grid Corporation of the Philippines (NGCP) after some questions were raised on compliance and if the government has been shortchanged on the transaction.
Petilla said he will look into the matter, but he will reconcile his move with the inquiries already done by previous secretaries.
“I have not conducted specific studies or investigation on this but I am looking into any result of the inquiries done by the previous secretary to avoid duplication,” the energy chief said.
It was tipped off by sources that former Energy Secretary and now Cabinet Secretary Rene Almedras reportedly “inquired into (the matter) confidentially.” During his stint, PSALM president Emmanuel R. Ledesma Jr. was not able to push with the prepayment deal.
Ledesma was also questioned by his own finance department, whether or not the “prepayment conditions” in the Concession Agreement have been complied with.
He indicated to media that the prepayment amounted to P57 billion and that will cover 10 years, but some officials at PSALM as well as TransCo noted that there have been some amounts “still contested and being reconciled with NGCP” prior to the prepayment deal. Technically, they considered the prepayment amount at $1.0 billion.
NGCP noted that it was PSALM which requested for prepayment and they just sincerely complied with it “to help the government” or PSALM on its financial woes.
But Ledesma said “NGCP notified PSALM that it is exercising said right (on prepayment)”, stressing further that “the provisions of the Concession Agreement on prepayment have been complied with.” He has not given answers on queries on the discount rate and how much the contested amount had been prior to the prepayment deal.
TransCo raised major question that the government may have earned more from the concession fees without PSALM entering into a prepayment arrangement.
For both the memorandum of PSALM and the letter of TransCo, Ledesma reportedly has not “responded in writing” as of press time. But parties came on record so if investigations in the future will happen, there are legal papers that will show and validate their respective positions on the matter. Ledesma’s reluctance to explain in writing set some concerns on the prepayment deal hanging and unresolved.
At the range of $1.0-billion prepayment, Ledesma noted that it will cover 8.5 years of the concession fees. And if computed based on the yearly turnover of NGCP fees, that could run beyond P100 billion.
No confirmation has been given yet, either by NGCP or PSALM, if a receipt has already been issued on the remitted prepayment.
Government sources noted that the prepayment is not needed at this point because PSALM still has cash flow from the universal charges (UC) and that the company can tap into financing options with better terms.
The debt-ridden energy firm been on the spotlight for failing to comply with its mandate on liability management and has also been fledgling on the continuing privatization of the remaining power assets.   source