PSALM demands payment of P671 million in overdue debt

Mary Grace Padin (The Philippine Star) - October 28, 2020 - 12:00am
https://www.philstar.com/business/2020/10/28/2052703/psalm-demands-payment-p671-million-overdue-debt

MANILA, Philippines — State-run Power Sector Assets and Liabilities Management Corp. (PSALM) has issued notices demanding two firms to pay their overdue obligations amounting to P671.16 million, the Department of Finance (DOF) said yesterday.

According to the DOF, PSALM president and chief executive officer Irene Besido Garcia and acting vice president for finance Manuel Marcos Villalon sent final demand letters to First Bay Power Corp. (FBPC) and Abra Electric Cooperative Inc. (ABRECO), giving them seven days from the receipt of the letters to pay their arrears.

Finance Secretary Carlos Dominguez and Energy Secretary Alfonso Cusi were furnished copies of the final demand letters, which were dated Aug. 24, 2020.

According to the finance department, FBPC has overdue obligations amounting to P35.15 million, while ABRECO has arrears worth P599.13 million on its power account and about P36.89 million in unremitted universal charge payments.

The DOF said ABRECO’s overdue power account covers a period of 10 years, consisting of restructured account, interest and penalty, value-added tax (VAT) and Energy Regulatory Commission (ERC)-approved power rate adjustments.

It noted that PSALM previously sent several written demand letters to the cooperative asking for the settlement of its outstanding power account obligations.

“However, up to this date, ABRECO continues to ignore the demand letters,” Garcia said.

The DOF said ABRECO committed to propose a payment option for its outstanding power account dues on Dec. 9 last year and later on entered into restructuring agreements with the agency, but the cooperative breached all of them.

Meanwhile, the DOF said PSALM’s computations of the cooperative’s unremitted universal charge collections were based only on its submitted reports from February 2003 to December 2015, and do not yet include unremitted collections from 2016 to the present.

The DOF said PSALM previously sent letters to ABRECO urging it to remit in full its universal charge collections, but the letters were also ignored.

On the other hand, the DOF said FBPC incurred arrears over a seven-year period as of July 31, 2020, covering power bill, interest and VAT, and ERC-approved power rate adjustments.

Garcia said FBPC’s overdue account would continue to accumulate interest until it is fully paid.

Earlier, Garcia said the non-payment of obligations pressed PSALM to resort to borrowings in order to fulfill its financial obligations to National Power Corp.

Finance Secretary Carlos Dominguez, in response, instructed PSALM to pursue collection efforts against delinquent independent power producer administrators (IPPAs) and electric cooperatives, and use all remedies available to prevent additional borrowing costs for the government.