01 Mar 2012
The Power Sector Assets and Liabilities Management (PSALM) Corporation seeks to clarify the allegations made by Ms. Myrna M. Velasco in her article titled “COA uncovers ‘doubtful’ PSALM accounts” that was published in the Manila Bulletin on 28 February 2012.
Ms. Velasco claimed in her article that a report from the Commission on Audit (CoA) has revealed that PSALM incorporated “doubtful entries” in its 2010 financial statement which, according to her, became the basis of PSALM’s proposed petitions to recover its stranded obligations in the form of additional Universal Charges (UC) to be passed on to electricity consumers.
Pursuant to Section 32 of Republic Act No. 9136, or the Electric Power Industry Reform Act (EPIRA), PSALM’s UC application covers the stranded debts of the National Power Corporation (NPC), which refer to the unpaid financial obligations of NPC, and stranded contract costs, which refer to the excess of the contracted cost of electricity under the eligible independent power producer contracts of NPC over the actual selling price of the contracted energy output of such contracts in the market. These contracts should have been approved by the Energy Regulatory Board as of 31 December 2000.
The 2010 Financial Statements of PSALM serve as a main reference only in the determination of the financial obligations of NPC assumed by PSALM. In its 2010 Annual Audit Report, the CoA issued no audit observations on PSALM’s outstanding financial obligations as of 2010 that would put its UC application in question. Specifically, the doubtful accounts stated in the CoA report refer to accounts subject to analysis, reconciliation, and validation upon availability of accounting records from NPC. PSALM excluded these doubtful accounts in its proposed UC applications.
The CoA stated: “In our opinion, except for the effects and the possible effects of the matters described in the Basis for Qualified Opinion, the financial statements present fairly, in all material respects, the financial position of the Power Sector Assets and Liabilities Management Corporation as of December 31, 2010, and its financial performance and its cash flows for the year then ended in accordance with state accounting principles generally accepted in the Philippines.”
The CoA’s basis for its Qualified Opinion pertains purely to the balances of NPC accounts that were transferred from NPC books and made part of PSALM’s financial statements. These NPC transferred accounts were not considered in the UC calculations summarized as follows:
| Account | Amount (in billion PhP) |
Remarks |
| Power Receivables | 2.873 | Dormant NPC power accounts |
| Due from Government Agencies | 11.048 | |
| Due to GOCCs and NGAs | 9.930 | |
| Other Receivables | 8.675 | |
Accounts Payable and |
1.231 | |
Accrued Expenses |
.979 | |
| Other Current Assets | 5.446 |
“Assets Held in Trust with NPC” for fund transfers and other assets forming part of NPC’s working capital as operator of NPC-transferred generation assets under the Operation and Maintenance Agreement (OMA). |
Cognizant of the CoA’s recommendation to reconcile and validate NPC’s “doubtful” accounts, PSALM created in October 2011 a joint task force on the cleaning of accounts retained at NPC/transferred to PSALM and the National Transmission Corporation (TransCo). The task force members came from PSALM, NPC and TransCo.
Moreover, various booking documents and reports related to OMA transactions are available in PSALM for the audit trail. The CoA recommended that PSALM directly record OMA transactions effective 2011 instead of NPC. Disbursement vouchers processed by NPC are further covered by PSALM’s disbursement voucher and turned over to the CoA for custody.
Given these facts, PSALM emphasizes that the NPC transferred “doubtful” accounts were neither considered in the UC calculation nor were they the basis of the proposed UC pass-on to consumers.
Strategic Communications and Partnership Division |