25 October 2012
The Senate of the Philippines should cut short the life of Power Sector Assets and Liabilities Management (PSALM) Corp., instead of extending it.
The Freedom from Debt Coalition (FDC) calls on the members of the Senate to junk the proposed Senate Bill 3250. The Senate should instead push for a review and renegotiation of onerous contracts entered into by the National Power Corporation (Napocor) with various foreign and local independent power producers (IPPs).
PSALM Corporation’s life deserves to be shortened because, instead of making the lives of Filipinos better and easier, it betrays the consumers' and the people's welfare and interests. PSALM Corp. failed to drastically reduce Napocor’s debt and electricity rates. The still huge Napocor debt is being passed on to consumers through the Universal Charge. Worse, it has this callous practice of giving huge incentives and bonuses to its executives and employees.
Republic Act 9136, or the Electric Power Industry Reform Act (Epira) created PSALM Corp. Section 50 of the said law states: “The principal purpose of the PSALM Corp. is to manage the orderly sale, disposition, and privatization of NPC generation assets, real estate and other disposable assets, and IPP contracts with the objective of liquidating all NPC financial obligations and stranded contract costs in an optimal manner.”
PSALM Corp. is expected to exist for 25 years. Introduced by Sen. Serge Osmeña, Senate Bill 3250 seeks to extend its life for another 10 years.
We are pushing for a review and renegotiation of IPP contracts because it may provide a 3-in-1 alternative to the issue.
First, on the debt of PSALM Corp. and Napocor. Prior to the enactment of Epira and creation of PSALM Corp., the debt of Napocor/PSALM Corp. was US$16.39 billion. Now, with more than 70 percent of the Napocor generation assets and lPP contracts privatized, PSALM Corp. has an outstanding debt of US$16.73 billion. The question is: Where are the proceeds of the sale of these assets?
Second, on skyrocketing electricity rates. Prior to the enactment of Epira and creation of PSALM Corp., the average electricity rate was around P5 per kilowatt-hour. Today, the average rate is around P10 per kWh.
Third, the review will expose the onerous terms to which government were bound by and the contractual guarantees to the IPPs that resulted to the unjust passing on of the debt to the consumers. Through the review and renegotiation, the government will be able to rescind the contracts where the IPPs have already more than sufficiently milked the government and the people for profit, as they have already recouped their investments and are only sitting pretty enjoying their returns – all at the consumers’ burden.
PSALM Corp. is a testament to the failure of Epira as a regime that would resolve the country’s power crisis and the Napocor debts. Its life, therefore, must be cut short, not extended. In fact, PSALM Corp., should be audited – its internal operations, the transactions it has undertaken, the contracts and agreements it has entered into, and more. -30-