By Butch Fernandez - February 24,
2020
THE Power Sector Assets and
Liabilities Management Corp. (Psalm) warned it will incur an annual borrowing
cost of about P1.7 billion a year should the P33.62 billion in delinquent
accounts remain unpaid by the Independent Power Producer Administrators (IPPAs).
The Psalm said the government could
have used this “substantial amount” to fund more priority programs on
infrastructure and capital development.
“If these hefty financial
obligations remain unpaid, PSALM will be compelled to contract new borrowings
in order to timely liquidate maturing obligations of the Napocor [National
Power Corp.]—a vicious cycle that will result in Psalm absorbing additional
interests and other finance charges,” Psalm President Irene Joy Besido-Garcia
was quoted in a statement as saying.
Last Thursday, San Miguel’s power
unit South Premiere Power Corp. said it has paid a total of P314.6 billion to
Psalm as of January 2020 for its administration of the capacity from the
1200-megawatt Ilijan power plant in Batangas. However, the Department of
Finance (DOF) still pointed to the SPPC as the one with the “highest unpaid
account in the sum of P23.94 billion as of December 31, 2019.”
The DOF noted that there is a
pending case before the Regional Trial Court (RTC) of Mandaluyong City where
the SPPC is asserting another formula for computing its payables to the Psalm.
This case has been pending since September 2015, according to the DOF.
The DOF said in a report the Psalm
disclosed that its average cost of borrowings for 2019 was at 5.07 percent.
Although its revenue collections
reached P98.3 billion, the Psalm said there are still P422.2-billion remaining
obligations from Napocor that PSALM will need to raise money for.
The P33.62-billion delinquent
accounts form part of the P95 billion in unpaid charges owed to PSALM not only
by IPPAs but by other industry players as well such as electric cooperatives
(ECs) plus receivables inherited from Napocor or those still subject to
reconciliation, Garcia said.
The DOF said it has since instructed
Psalm to run after IPPAs over the delinquent accounts and cooperatives.
According to Finance Undersecretary
for Legal Affairs BayaniAgabin, the PSALM collected last year around
P70.41 billion from its various IPPAs.
Agabin added that Psalm was ordered
by the DOF chief to immediately initiate collection cases against erstwhile
IPPAs of the Unified Leyte Strips of Energy in Tongonan, Leyte, particularly Good
Friends Hydro Resources Corp. of Fernando Borja and the Waterfront
Mactan Casino Hotel Inc. that allegedly have delinquent accounts with the
Psalm.
Contracts of these two IPPAs—Good
Friends and Waterfront—were terminated by the PSALM in August 2017 and
October 2019, respectively, for nonpayment.
Good Friends owes the Psalm around
P1.21 billion while Waterfront has unpaid obligation of P87.74 million, the DOF
said.
Two IPPAs of Filinvest
Development Corp.—FDC Utilities Inc. for the Unified Leyte Strips of Energy
contract and FDC Misamis Power Corp.— for the capacity of Mindanao I and II
Geothermal Power Plants are also being compelled by the Psalm to pay their
delinquent accounts amounting P1.17 billion and P2.63 billion, respectively.
Both IPPA contracts were also
terminated by PSALM for nonpayment, according to the DOF. The amounts that
are due PSALM are the subject of two separate arbitration proceedings initiated
by these Filinvest companies, it added.
Notwithstanding the ongoing arbitration,
Filinvest recently expressed to Psalm its willingness to settle the delinquent
accounts, Garcia said.
Vivant-Santa Clara Northern
Renewables Generation Corp. (Northern Renewables), which administers the IPPA
agreement for the Bakun Hydroelectric Power Plant in Ilocos Sur, also has an
unpaid account of P4.19 billion.
Garcia said the Psalm expects to
collect this year additional payments from Northern Renewables in view of a
settlement agreement they had submitted to the court.
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