The Power Sector Assets and Liabilities Management Corp. (PSALM) has sent the final demand letter to the Olongapo City government to pay its long overdue obligations of at least P6.713 billion, the Department of Finance (DOF) said in a statement yesterday.
The DOF said the amount consists of electricity bills and other charges over a 12-year period.
In the final demand letter sent by Irene Besido Garcia, PSALM president and chief executive officer, and Manuel Marcos Villalon, acting vice president for finance, Olongapo City was given seven calendar days from receipt of the demand letter to pay its arrears or face legal action.
PSALM addressed its formal and final demand letter to Rolen Paulino, Olongapo City mayor, for obligations of the city’s public utilities department amounting to P6.713 billion as of July 31, 2020, covering a period of over 12 years.
Garcia and Villalon told Paulino that PSALM will be constrained “to avail of all appropriate legal remedies to protect PSALM and the government’s interests, including the filing of criminal, civil and administrative cases” against him and other local government officials of the city, if the Olongapo City government fails to pay the “demanded overdue amount within the prescribed period.”
In its letter to Paulino, PSALM said the local government unit (LGU) incurred the following long-due obligations: power bills with interest and value-added tax (VAT) amounting to P5.66 billion; Default Wholesale Supplier Arrangement charges with interest and VAT, P813.77 million; Deferred Accounting Adjustment charges with interest and VAT, P230.71 million; and VAT on the Automatic Cost Recovery Mechanism True Up, P8.72 million.
According to the DOF, PSALM first sent a final demand letter to the city government in May 2019, with the arrears then amounting to P6.18 billion, which remain unpaid for over nine years.
The LGU responded by remitting P20 million in July and December last year, leaving a still substantial amount of arrears unpaid, the DOF said.
Thus, as of July this year, the arrears have ballooned to P6.713 billion and will continue to increase if it remains unpaid, PSALM said.