PSALM seeks DOF approval on Murang Kuryente subsidy

By Myrna M. Velasco – Updated April 13, 2020, 9:50 AM
from Manila Bulletin

State-run Power Sector Assets and Liabilities Management Corporation (PSALM) is seeking approval from the Department of Finance (DOF) on its proposed loan procurement to cover calculated rate reduction for consumers under the Murang Kuryente Act or the law that targets to pare or wipe out universal charges (UCs) in power bills.

PSALM President and CEO Irene Joy B. Garcia said the document on the company’s proposed borrowings this year is still pending with DOF for its approval.

The rate reduction is targeted for April this month, providing consumers relief in their forthcoming electric bills.

“For this year, we will have to continue the usual process of securing a loan. The papers are still with DOF, so we will have to wait for that,” Garcia said.

The law, which was passed August last year was no longer included in the General Appropriations Act (GAA) for 2020, hence, the option being resorted to by PSALM and other relevant agencies shall be to bridge-finance the requirements on the Murang Kuryente subsidy for this year through loans.

The universal charges to be covered by the Malampaya fund allocation of ₱208 billion shall be those of stranded contract costs and stranded debts which are components and separate line items in the electric bills.

Part of the amounts proposed to be subsidized are those arising from perceived blunders in the privatization of the National Power Corporation – including the assets divested on fire sale – and any costs which the government failed to fetch from privatization proceeds were rapaciously defined as “universal charges” and subsequently passed on to consumers as UCs in the electric bills.

The calculated amount in the Malampaya fund is just currently a book entry – and the way to replenish it shall be through borrowings.

“The law got signed in August 2019, because of that, there was a timing issue. We cannot cover the 2020 debt directly from the budget, so what we will do is we will borrow as PSALM,” the company chief executive said.

Garcia has not specified the loan amount, but she previously told media of ₱43 billion scheduled borrowings that the company will be securing this year.