Our exposé on the inability by the Power Sector Assets and Liabilities Management Corp. (PSALM) to collect overdue accounts from Independent Power Producer Administrators (IPPAs) and electric cooperatives has pried open a scheme by which congressmen allegedly act as protectors of some of those in the list.
The thought that PSALM has been forced to take out loans which the government guarantees in order to timely fulfill the former’s mandate of liquidating the financial obligations of the National Power Corp. certainly leaves a bad taste in the mouth.
PSALM took over all the assets and debts of Napocor when Congress passed the Electric Power Industry Reform Act or Republic Act 9136. Records show that, as of last year, while PSALM was able to trim its debt to about P424.8 billion from P1.2 trillion in 2003, it borrowed P23 billion in 2018, and $1.1 billion more last year from foreign lenders so it could service its dollar and yen-denominated loans. This has set back the government by P2.62 billion per year in interests, guarantee fees and other finance charges alone.
Just imagine: Had the IPPAs’ loans been paid on time; government funds could have otherwise been used for the construction of public-school classrooms or roads and bridges. This is why Department of Finance (DOF) Secretary Sonny Dominguez had instructed PSALM to relentlessly pursue collection efforts against these IPPAs, and use all remedies available to protect the rights of the government and the Filipino people.
A recent congressional hearing to ascertain the financial stability of PSALM has cut open an interlocking web of relationship between Congress’ officials with oversight powers over the energy industry and companies that are blamed for keeping the government deep in debt.
The probe by the House of Representatives’ Good Government Committee, headed by Bulacan Rep. Jose Antonio Sy-Alvarado, in conjunction with the House Committee on Public Accounts, headed by Anakalusugan Party-list Group Rep. Michael T. Defensor, aims to determine if PSALM could be out of the red given how heavy the huge debts that have been pulling it down.
According to some industry insiders, the padrino system is very much the norm when it comes to the PSALM issue, insinuating that other public officials and some members of Congress are serving as intermediaries to get some companies in the list off the hook. To be fair, these remain allegations that still need to be proven beyond reasonable doubt.
While it is condemnable that PSALM had to borrow just to pay off the debts of IPPAs and electric cooperatives, I should, however, caution the House Committee on Public Accounts, PSALM and the DOF to temper their public pronouncements.
For one, some of these companies are contesting in various courts PSALM’s allegations and to render judgment before the courts give theirs is prejudicial. San Miguel Corp., whose Ilijan power plant was named as one of the companies, with an alleged unpaid obligation of P23.94 billion to the government, has urged these government agencies to respect the rule of law.
“Let us not undermine the integrity of the court, and return to basics. We would always choose to be on the side of law, instead of presenting a good yet misleading story. Let us stick to the facts of the case, and let the court decide,” SMC President and COO Ramon S. Ang said. Ang is reacting to a series of stories coming out in tabloids and broadsheets quoting the DOF as running after SMC over its alleged unpaid debts to PSALM, through its power arm South Premiere Power Corp. (SPPC), on the 1,200-MW Ilijan power plant. The subject of contention has been pending with the Mandaluyong Regional Trial Court (RTC) since 2015.
The statement reads: “To expedite its resolution, SPPC filed a motion for production of documents by PSALM in order to have full disclosure of the facts. However, instead of just proceeding with the discovery process by submitting the requested documents, PSALM filed a motion to hear other defenses unrelated to the merits of the case, which the RTC and the Court of Appeals have both denied.
“The RTC has also indefinitely enjoined PSALM’s termination of the IPPA Agreement in favor of SPPC while the case remains pending. Such injunction has been upheld both by the Court of Appeals and the Supreme Court.”
Ang maintained that his company is one with the DOF and PSALM in wanting to have closure to the case. However, “premature closure by distorting the facts through the court of public opinion is only compromising the integrity of our justice system.”
The main dispute between PSALM and SPPC is due to different interpretations in computing generation payments provided for under the IPPA Agreement, not in the amount stated in SMC’s bid. Generation payments are based on actual generation data and the determinants of revenues derived from the capacity of the Ilijan power plant, both of which could not be reasonably determined and, thus, would not be information included in the bid when the IPPA for the plant was bidded out.
As of January 31, 2020, out of
the P314.6 billion paid by SPPC to PSALM as IPPA of the Ilijan power plant,
about P240.7 billion paid by SPPC is considered as generation payments.
PSALM also failed to explain its reasons for claiming an additional amount of
P23.94 billion in generation payments and related charges from SPPC.
Ang explained that the dispute stems from PSALM’s erroneous use of Wholesale Electricity Spot Market prices in computing for generation payments beginning January 2013 to the present. SPPC used the tariff rate approved by the Energy Regulatory Commission for the Ilijan power plant, when appropriate, as required under the IPPA Agreement in computing generation payments to PSALM. This approach is also consistent with the baseload nature of the Ilijan power plant, and the fact that its capacity is contracted in full to bilateral customers, primarily Meralco, which pays a tariff rate approved by the ERC.
At stake here is the financial viability of PSALM and its collapse will have a negative impact on us taxpayers. I believe that as long as all the issues remain unresolved, and given the penchant of some politicians to grandstand to further their presidential ambitions, public officials who are mandated to oversee the industry should keep a safe distance from the issue and moderate their own self-indulgence.
For comments and suggestions, e-mail me at mvala.v@gmail.com