Independent Power Producer Administrators (IPPAs) and electric cooperatives dominate the list of the top corporate entities with long overdue accounts with the Power Sector Assets and Liabilities Management Corp. (PSALM) amounting to a combined P59.23 billion as of December 2018. Many of these accounts were transferred by the National Power Corporation (NAPOCOR) to PSALM by virtue of EPIRA, or Republic Act 9136, in 2001.
A report by PSALM to Finance Secretary Carlos Dominguez III, who chairs the state-run firm’s Board of Directors, showed that several IPPAs have pending overdue accounts with PSALM amounting to P28.46 billion as of December 2018. Some of the IPPAs are contesting the amounts due in courts or in arbitral tribunals.
San Miguel Corp. (SMC)’s South Premiere Power Corp. (SPPC), led by its President, Elenita Go and which administers the Ilijan gas-fired power plant in Batangas City, has the highest unpaid obligation due to PSALM, in the sum of P19.75 billion. PSALM earlier terminated the IPPA, but the termination has been enjoined by the courts.
Vivant-Sta. Clara Northern Renewables Generation Corp. (Vivant-Sta. Clara), formerly owned by Vivant Energy and Sta. Clara Power Corp., owes P3.86 billion to PSALM, which awarded it an IPPA contract for the Bakun Hydroelectric Power Plant in Ilocos Sur. Vivant-Sta. Clara filed a petition for rehabilitation. It was recently purchased by North Renewable Energy Corp, but despite the change in ownership, no payment has been made to PSALM for its overdue accounts.
The Good Friends Hydro Resources Corp. (Good Friends) of Lucio Lim Jr. has yet to pay PSALM P1.16 billion, while FDC Utilities Inc. (Filinvest Utilities) led by Juan Eugenio Roxas as its president-CEO and a subsidiary of Filinvest Development Corp., owes P1.12 billion. Both IPPAs were involved with the contract to administer the Unified Leyte Geothermal Power Plants.
A Filinvest Utilities subsidiary, the FDC Misamis Power Corp., also owes PSALM P2.56 billion, as the previous IPPA for the Mindanao I and II Geothermal Power Plants.
“Due to these overdue accounts, the Government through PSALM is constrained to resort to borrowings that the National Government guarantees, in order for PSALM to timely fulfill its mandate of liquidating the financial obligations of the National Power Corporation,” said PSALM president-CEO Irene Joy Garcia.
“In fact, in 2018, PSALM borrowed about P23 Billion to cover its maturing obligations, and PSALM is set to borrow USD 1.1 Billion for obligations maturing this end of May 2019,” she added. As a result, PSALM had to pay interest, guarantee fees and other finance charges of about P2.62Billion per year. Had the IPPAs and electric cooperatives paid, PSALM would not incur this much additional costs.
Dominguez noted that “all these borrowing costs could have otherwise been utilized by the Government for the construction of public school classrooms or to build roads and bridges.” Dominguez instructed PSALM to relentlessly pursue collection efforts against these IPPAs and use all remedies available to protect the rights of the government and the Filipino people.
The PSALM report also listed 10 electric cooperatives and industries with the largest unpaid obligation due to PSALM with a combined total of P28.74 billion as of December last year.
The Lanao del Sur Electric Cooperative (LASURECO) has, the highest overdue account, amounting to P9.63 billion.
Represented by its general manager Nordijiana Ducol, LASURECO owes PSALM the largest and longest overdue amount dating back 16 years, according to the report.
The Public Utilities Department of Olongapo City, although no longer a PSALM client still owes P6.07 billion in obligations, representing over 9 years of overdue power bills, over 10 years of unpaid value-added tax (VAT) payments and 5 years of penalties and interest. After LASURECO, it is second on the list of the top ten entities consisting of electric cooperatives and industries with long overdue accounts with PSALM.
The defunct PICOP Resources Corp. that used to be owned by TP Holdings, Inc. is third with overdue accounts pending since 2008, which now amounts to P2.96 billion.
Represented by Jelinda Pempeña, the Albay Electric Cooperative Inc. (ALECO), has P2.61 billion of unpaid power bills, VAT and interest and penalties. Its unpaid account dates back to 2006. ALECO, which is 4thon the list, is no longer PSALM’s customer and is now known as the Albay Power Energy Corporation (APEC).
The Maguindanao Electric Cooperative Inc. (Magelco) led by Sultan Ashary Maongco, is 5th with P1.76 billion in unpaid obligations (more than 10 years of overdue power bills); while Global Steelworks Int’l Inc. (now known as Global Steel Philippines), a subsidiary of Global Steel Holdings Limited, is 6th with an unpaid account since 2009 and overdue power bills amounting to P1.68 billion.
Seventh on the list is a former PSALM client–Pampanga III Electric Cooperative Inc. (Pelco III)—represented by Maria Elizabeth Urbano, with P1.27 billion in unpaid obligations, with over 4 years overdue in its restructured account and over 2 years of interest and penalties. Pelco III has requested for a restructuring of its account, according to PSALM.
Next is the Davao del Norte Electric Cooperative Inc. (Daneco) led by Emmanuel Galarse with P1.24 billion in overdue obligations. PSALM reported that negotiations are ongoing with Daneco on its overdue restructured account and power bills.
Rounding up the list are the defunct Magellan Cogeneration Inc. (MCI), which used to be controlled by Covanta Energy and has P750.86 million in unpaid obligations; followed by the former Bacnotan Steel Corp., now known as Union Galvasteel Corp. (UGC) of the Phinma Corp., with P743.68 million in overdue accounts.
PSALM said that besides LASURECO and the other electric cooperatives on the top 10 list, five other electric cooperatives were among the firms with the largest pending obligations.
These are the Northern Samar Electric Cooperative Inc. (Norsamelco) represented by Hector Tabilisma with P742.13 million in overdue line rentals, restructured account, power bills and VAT. A revised restructuring scheme was signed with the coop in November last year, according to PSALM.
Also on the list is the Sorsogon II Electric Cooperative Inc. (Soreco II) led by Percival Alvarez with P510.15 million in overdue power bills, restructured account, VAT and interest and penalties.
Next is the Samar I Electric Cooperative Inc. (Samelco I) led by Placida Balios with P303.04 million in unpaid restructured account, power bills, VAT and line rentals. A revised restructuring scheme was signed by the coop with PSALM last Nov. 29.
The Zamboanga del Sur II Electric Cooperative Inc. (Zamsureco II) represented by Herman Agpawa Jr. has an overdue account since 2017, which now amounts to P275.69 million in unpaid power bills.
Sorsogon I Electric Cooperative (Soreco I) represented by Edwin Garcia has unpaid obligations of P206.23 million to PSALM with overdue restructured account. PSALM has ongoing negotiations with Soreco I for the settlement of its outstanding obligations.