08 Jun 2022
The Department of Finance (DOF) has instructed the Power Sector Assets and Liabilities Management Corp. (PSALM) to strictly enforce its credit and collection policy against Maguindanao Electric Cooperative, Inc. (MAGELCO) and Lanao del Sur Electric Cooperative, Inc. (LASURECO) for their failure to settle their outstanding accounts exceeding P16 billion combined and to pay their current power bills on time.
According to the DOF, PSALM should not give free electricity to MAGELCO and LASURECO because (1) it is not PSALM’s mandate to subsidize electricity costs, and (2) PSALM does not have the budget to do so.
The poor payment performance of MAGELCO and LASURECO has been a long standing problem, stemming from both cooperatives’ financial mismanagement and low collection efficiency from consumers.
As a consequence, MAGELCO and LASURECO are unable to fully pay their obligations, compelling PSALM to incur more borrowings to cover the ever-widening shortfall.
PSALM has repeatedly demanded payment from MAGELCO and LASURECO, with the threat to curtail their energy allocation should they fail to settle in full their power bills and to limit their power allocation equivalent to their actual payments to PSALM.
To bring an end to the ballooning financial obligations of MAGELCO and LASURECO, the DOF has ordered PSALM to commence the curtailment for MAGELCO and disconnection for LASURECO starting 26 May 2022.
In the case of MAGELCO, it only paid P45.5 Million out of the total power bill amounting to P147.2 Million for December 2021 to April 2022.
As of 30 April 2022, MAGELCO has outstanding payables to the Government amounting to P3.8 Billion.
On the other hand, LASURECO’s outstanding payables to PSALM amounted to P12.9 Billion as of 30 April 2022, representing outstanding power bills.
To date, LASURECO has not expressed intention to settle its outstanding accounts with PSALM.
As such, the DOF instructed PSALM to commence the disconnection of LASURECO from the Agus 1 Hydroelectric Power Plant.
In addition to above mentioned outstanding power bills, MAGELCO and LASURECO likewise have unremitted Universal Charges (UC) amounting to P29.0 Million and P9.5 Million, respectively, which they have already collected from electricity end users.
Strategic Communications and Partnership Division