Posted by: empowerconsumers | August 26, 2009

PSALM files petition to recover P471-B Napocor’s debts

August 24, 2009, Page 1

Debt recovery plea to hike power costs
Jose Bimbo F. Santos

The Power Sector Assets and Liabilities Management Corp. (PSALM) has filed a petition seeking to recover about P471 billion in debts of National Power Corp. (Napocor), which could translate to an average increase of 30 centavos per kilowatt-hour for consumers.

The Energy Regulatory Commission (ERC) said it had scheduled hearings from September to October on the privatization body’s June petition regarding Napocor’s stranded debts, or unpaid financial obligations which have not been liquidated by the proceeds from state power asset sales.

Under Republic Act 9136 or the Electric Power Industry Reform Act (EPIRA), stranded debts are included under the universal charge component of consumer power bills. These debts are outside the P200 billion which the government assumed.

In the petition, PSALM said a 17-year recovery period – which it favors – would translate to an additional 30 centavos in universal charges, while a 25-year recovery equals a 22.5-centavo hike.

PSALM – which is tasked to privatize all state-owned power assets – said gains would offset the shortfall during the period 2009-2024 due to inadequacy of privatization proceeds to cover capacity fees and debt service requirements.

An ERC official said the hearings starting next month would be staged nationwide.

This would be the NPC (Napocor) debt not covered by privatization proceeds and assumed by consumers as provided by law, ERC executive director Francis Saturnino C. Juan added.

The ERC would still have to inquire on the projections in the petition as well as the rates if these are accurate, Mr.. Juan said.

The rules for recovery of stranded debts were issued in 2007 but PSALM, in its petition, said calculations then had showed that the projected cash flows from operations as well as the proceeds from the privatization… were more than enough to finance NPC’s debt service and other financial obligations.

Conrad S. Tolentino, PSALM spokesman, said that it took time to update the data.

The privatization effort had not been that active as of now so it’s hard to estimate how much investors are willing to put up for the plants, he said.

Last year we already had the data but we had to recompute to be sure.

Privatization of the country’s generating assets hit the 73% mark after the sale of the 600-megawatt Calaca coal-fired power plant in Batangas to DMCI Holdings, Inc. last July.

PSALM was created under the EPIRA to manage the privatization of Napocor’s assets and independent power producer contracts, with the objective of liquidating all of the state power agency’s financial obligations.


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