19 Oct 2011
The Power Sector Assets and Liabilities Management (PSALM) Corporation will study the implications of the proposal suggested by some lawmakers to withdraw petitions filed for the recovery of the Universal Charge (UC) for stranded debts (SD) and stranded contract costs (SCC).
According to PSALM President and Chief Executive Officer Emmanuel R. Ledesma, Jr., PSALM is awaiting the formal resolution of the House of Representatives on PSALM's UC applications with the Energy Regulatory Commission (ERC) before taking the necessary actions.
"PSALM will assess the implications of the proposal and will continuously seek other possible sources to narrow the huge gap between the privatization proceeds and the outstanding maturing obligations of the National Power Corporation (NPC) should the PSALM Board adhere to the recommendation to withdraw the UC applications," Ledesma said.
Ledesma also belied the comments made by Trade Union Congress of the Philippines Representative Raymond Mendoza that PSALM, ERC, and the Department of Energy are remiss in their respective obligations to bring down power rates. PSALM was accused of "milking the cow" by draining the public of cash in its move to pass on the recovery of NPC's stranded obligations to consumers.
"It is important to point out that the recovery of the Universal Charge is mandated under the EPIRA (Electric Power Industry Reform Act) and PSALM has stringently followed the amended guidelines issued by the ERC in determining the amount of the UC-SD and UC-SCC," Ledesma said.
Ledesma further explained that the EPIRA allowed the recovery of the UC since it is critical to the government's liability management program for the power sector. The UC collections will be matched with existing debt maturities, thereby reducing PSALM's borrowing requirements.
The House of Representatives also proposed to conduct another round of renegotiations on the government's contractual obligations with independent power producers (IPPs).
"Since the completed renegotiation of 35 IPP contracts in 2003 proved to be a meritorious exercise, which led to an estimated savings of USD2.94 billion in nominal terms, or USD1.028 billion in discounted present value, PSALM may look at another renegotiation to put closure to public criticisms over the alleged onerous contracts with the remaining 19 IPPs should the PSALM Board adhere to a resolution passed by the House of Representatives to this effect," Ledesma said.
Strategic Communications and Partnership Division |