Malampaya fund not enough to cover Napocor debts

By Danessa Rivera (The Philippine Star) | Updated October 5, 2017 - 12:00am

http://www.philstar.com/business/2017/10/05/1745533/malampaya-fund-not-enough-cover-napocor-debts

MANILA, Philippines — A lawmaker is proposing the use of the Malampaya fund to partly bring down electricity rates by covering the prospective charges to consumers sought by the Power Sector Assets and Liabilities Management Corp. (PSALM).

The Energy Resource Development Fund, commonly known as the Malampaya fund, has a current balance of P193 billion, still not enough to pay for the stranded costs and debts of National Power Corp. (Napocor), Sen. Sherwin Gatchalian said yesterday.

PSALM, the entity created by the Electric Power Industry Reform Act (EPIRA) of 2001 to privatize government-owned assets, has total financial obligations of P491 billion but these are not being charged to consumers.

PSALM officer-in-charge for finance Luisa Esteban said the agency has pending applications with the Energy Regulatory Commission (ERC) to recover stranded contract costs (SCC) and stranded debts (SD) amounting to P233.24 billion.

SCC refers to the excess of Napocor’s contracted cost of electricity with independent power producers over the actual selling price of the output. On the other hand, SD refers to any unpaid financial obligations which have not been liquidated by the proceeds from the sales and privatization of Napocor assets.

These are passed on to end-users through the universal charge, a pass-on rate to consumers to cover the Napocor’s SD and SCC, missionary electrification and the environmental fund.

Energy Secretary Alfonso Cusi has been pushing to use the Malampaya funds to pay for Napocor debts, instead of passing on the burden to consumers.

He said this is one way of lowering power costs in the country, which is among the highest in Asia and the most expensive in the ASEAN region, based on the Department of Energy’s Power Development Plan 2017 to 2040.

Sen. Ralph Recto has also sponsored Senate Bill 924, which details the use of Malampaya fund for the payment of SCC and SD to directly benefit power consumers and place the 60 percent government share from the fund under the scrutiny of Congress through the General Appropriations Act (GAA).

However, the latest figures show the Malampaya fund cannot cover all the SCC and SD applications of PSALM,  Gatchalian said.

“The focus here is to find ways to pay for stranded costs and stranded debts,” he said.

Consumer groups have also raised concerns over the figures, since consumers will still have to pay for those debts.

“We are concerned that the Malampaya fund will not be enough. There’s still a remaining balance. Our concern is that the remaining balance will be paid by consumers. While the bill will help alleviate that, consumers are still left to pay the SCC and SD,” CitizenWatch convenor Hannah May Viola said.

Energy Undersecretary Gerardo Erguiza said the DOE has laid down the policy on the Malampaya fund but the decision to use the fund and where to use it will solely be under the discretion of Congress.

Congress will now have to strike a balance between using the Malampaya fund to pay off Napocor’s debts and to use it for its original purpose, since the EPIRA states it is reserved for energy resource development and exploitation activities.

“The question we are facing right now is policy and strategy on the Malampaya fund. Or we will use it to stop from collecting to the public future SD and SCC,” he said. “It is not enough to cover all but at least, it gives some reprieve to consumers,” Erguiza said.