25 Aug 2014
"If our funds are garnished, our long-term debts would become immediately due and demandable," informs Power Sector Assets and Liabilities Management (PSALM) Corporation President and CEO Emmanuel R. Ledesma, Jr. "This will result in operating cash deficit, which will lead to power shortage nationwide," he adds.
Mr. Ledesma explains that, under PSALM's loan agreements, garnishment is a ground for default which will activate the payment acceleration clause. Given cross-default provisions, an event of default in one loan will cause default in other loans. Consequently, PSALM would be obligated to instantly settle outstanding obligations amounting to P329 Billion (as of June 2014). Without any budget allotted for this unscheduled expenditure, PSALM would have to rely on the national government for support through advances or on-lending arrangements, which would entail additional government borrowings.
As a result of insufficient funds to cover operational requirements, PSALM's performance of its responsibility to ensure energy security will be rendered difficult, if not impossible. PSALM is responsible for the fuel supply and operations budget of its owned power plants, namely the Malaya Thermal Power Plant in Luzon, Power Barges (PBs) 101 and 102 and Naga Coal-fired Thermal Power Plant (CFTPP) in Visayas, and PB 104 in Mindanao, all of which produce around 430 MW in dependable capacity. PSALM is also obliged contractually to provide for the fuel requirements of Independent Power Producer (IPP) plants, namely Ilijan Natural Gas Power Plant (NGPP) in Luzon, and Zamboanga Diesel Power Plant (DPP) and General Santos DPP in Mindanao.
Mr. Ledesma further explains that if the Independent Power Producer Administrators (IPPAs) allow the garnishment of monthly and generation payments to PSALM, PSALM in turn would be unable to pay capacity and other fees for the IPPs in breach of its contract with the IPPs. PSALM is contractually responsible to pay for the capacity fees for the following power plants with appointed IPPAs: Bakun Hydroelectric Power Plant (HEPP), Ilijan NGPP, Pagbilao CFTPP, Sual CFTPP, and San Roque HEPP. The capacity/energy fees for the following power plants without IPPAs are, in contrast, PSALM's direct obligations which will likewise be adversely affected: Benguet Mini-Hydros, Caliraya-Botocan-Kalayaan HEPP, Casecnan HEPP, General Santos DPP, Mindanao CFTPP, Mt. Apo 1 and 2 GPP, Unified Leyte Geothermal Power Plant (GPP), and Zamboanga DPP.
PSALM also collects and administers the Universal Charge for Missionary Electrification, which is the source of funds of the National Power Corporation (NPC) for its operations in off-grid areas.
"Again, we implore the recipients of the patently void notices of garnishment to exercise prudence. We reiterate our earlier statement, which explains the necessity for compliance with the legal procedure for garnishment of public funds, and with the Supreme Court's 2009 Resolution holding that PSALM is entitled to due process and has a mere subsidiary liability," Mr. Ledesma states.
Strategic Communications and Partnership Division |