P200 B from Malampaya fund may pay for power debts

by Myrna Velasco August 16, 2016

http://www.mb.com.ph/p200-b-from-malampaya-fund-may-pay-for-power-debts/

The scale of Malampaya fund that could be utilized to wipe out power debts may reach as high as P200 billion with expected additional turnover of royalty share to the national government.

This was indicated by Senator Ralph Recto during a hearing by the Senate committee on energy delving on the series of yellow and red alert conditions that struck Luzon grid in the past weeks.

The lawmaker noted that based on the data he culled from the Department of Finance (DOF), the current balance of the Malampaya fund is at P187 billion.

Nevertheless, this could still go up this year with the additional remittance of the Malampaya consortium of estimated P27 billion that shall account for the 60-percent royalty share of the State from the gas field project.

Recto said he is ready to sponsor the bill in the Senate because that could be a sure-fire way to bring down electricity rates for Filipino consumers. A counterpart bill in the House is similarly expected to be filed.

Energy Secretary Alfonso G. Cusi said he is amenable to plans of funneling the Malampaya fund to retire the debts and other outstanding financial obligations of PSALM, but with the requisite legislation or law that must be passed in Congress.

The magnitude of PSALM indebtedness as calculated until the end of its corporate life in 2026 would reach R245 billion and that could translate to P0.28 per kilowatt hour (kWh) increase in the electric bills of consumers.

If the Malampaya fund will be applied to expunge the power sector’s stranded liabilities, it will redound to overall reduction in the rates because the universal charge (UC) component shall already be eliminated in the bills.

Cusi said the remaining amount that could not be covered by the Malampaya fund shall be offset eventually by anticipated additional proceeds from the continuing privatization of the National Power Corporation’s assets.

PSALM currently has applications for P70 billion worth of stranded debts recoveries; and P35 billion for stranded contract costs. These filings to be recouped as universal charges are still being evaluated by the Energy Regulatory Commission.

The company said it would need immediate approval of these petitions because it has P105 billion debt settlements from next year until 2019. It can only get away with the proposed cost pass-on if the Malampaya fund alignment will be approved soon.