The Power Sector Assets and Liabilities Management Corp. (PSALM) will incur an annual borrowing cost of about P1.7 billion a year, if the P33.62 billion delinquent accounts remain unpaid by several Independent Power Producer Administrators (IPPAs), the Department of Finance (DOF) said.
The DOF said in a statement over the weekend the substantial amount could have otherwise been used by the government to spend more on its priority programs on infrastructure and human capital development.
In its yearend report to Carlos Dominguez, DOF secretary, PSALM disclosed that its average cost of borrowings was 5.07 percent for 2019.
While revenue collections reached P98.3 billion in 2019, there is still P422.2 billion remaining obligations from National Power Corp. (Napocor) that PSALM will need to raise money for, the DOF said.
PSALM said it will continue collection efforts to go after IPPAs with delinquent accounts as the DOF instructed the agency to pursue all legal options to compel these IPPAs to pay up.
“If these hefty financial obligations remain unpaid, PSALM will be compelled to contract new borrowings in order to timely liquidate maturing obligations of Napocor — a vicious cycle that will result in PSALM absorbing additional interests and other finance charges,” Irene Joy Besido-Garcia, PSALM president, said in the same DOF statement.
The P33.62 billion delinquent accounts are part of the P95 billion in unpaid charges owed PSALM not only by IPPAs but by other industry players as well such as electric cooperatives (ECs) plus receivables inherited from Napocor or those still subject to reconciliation, Garcia said.
Dominguez has similarly directed PSALM to run after delinquent ECs, she added.
In its statement, the DOF said San Miguel Corp.’s South Premiere Power Corp. (SPPC), which administers the capacity of the Ilijan gas-fired power plant in Batangas City, has the highest unpaid account in the sum of P23.94 billion as of end-2019.
There is a pending case before the Regional Trial Court of Mandaluyong City where SPPC is asserting another formula for computing its payables to PSALM, the DOF said. This case has been pending since September 2015.
Meanwhile Dominguez, who is PSALM chairman, directed PSALM to immediately initiate collection cases against the erstwhile IPPAs of the Unified Leyte Strips of Energy in Tongonan, Leyte, particularly Good Friends Hydro Resources Corp. and the Waterfront Mactan Casino Hotel Inc. that have delinquent accounts with PSALM.
Contracts of these two IPPAs were terminated by PSALM in August 2017 and October 2019, respectively, for non-payment, the DOF said. Good Friends owes PSALM P1.21 billion, while Waterfront has unpaid obligation of P87.74 million.
Two IPPAs of Filinvest Development Corp., namely FDC Utilities Inc. for the Unified Leyte Strips of Energy contract and FDC Misamis Power Corp. for the capacity of Mindanao I and II Geothermal Power Plants, are also being compelled by PSALM to pay their delinquent accounts amounting P1.17 billion and P2.63 billion, respectively.
Both IPPA contracts were also terminated by PSALM for non-payment.
The amounts due PSALM are the subject of two separate arbitration proceedings initiated by these Filinvest companies.
But notwithstanding the ongoing arbitration, Filinvest recently expressed to PSALM its willingness to settle the delinquent accounts, Garcia said.
Vivant-Sta. Clara Northern Renewables Generation Corp. (Northern Renewables), which administers the IPPA agreement for the Bakun Hydroelectric Power Plant in Ilocos Sur, has an unpaid account of P4.19 billion, the DOF said.
PSALM expects to collect additional payments from Northern Renewables this 2020 in view of a settlement agreement they had submitted to the court.
Bayani Agabin, DOF undersecretary, said PSALM was able to collect P70.41 billion combined from its various IPPAs last year.
