26 August 2009
– While the petition of Power Sector Assets and Liabilities Management Corp. (PSALM) seeking to recover about P471 billion in debts of National Power Corp. (Napocor) deserves to be heard by the Energy Regulatory Commission (ERC), the Freedom from Debt Coalition believes that the more urgent action the ERC should do is to conduct an exhaustive audit of how the assets were sold.
Etta Rosales, FDC vice president, said that an audit of PSALM’s performance is necessary because the proceeds from the sale of government energy assets and contracts with independent power producers “were supposed to help pay off debts so we could reduce power rates.”
“But the opposite happened. Through these power sales, we were made to pay higher rates because we absorb stranded debts and stranded contract costs. Thus, they privatized the profits, but socialized the costs,” said Rosales.
Stranded debts are unpaid financial obligations which have not been liquidated by the proceeds from the sale of state’s power assets.
PSALM petition favors to recover Napocor’s debt in a 17-year recovery period that would translate to an additional 30 centavos in universal charges, than in a 25-year recovery time that would translate to a 22.5-centavo hike.
What is also appalling, according to the group, is that it is PSALM that is asking Napocor’s debts be part of tariffs.
“That distinction is important because PSALM’s privatization should have erased Napocor’s debts. PSALM is effectively asking us to pay for their failure. This is unacceptable,” said Rosales.
According to a news report
, the ERC said it had scheduled nationwide hearings from September to October on PSALM's petition.
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. -30-