Power firms seek gov’t financial aid
By Myrna M. Velasco – May 24, 2020, 10:00 PM
from Manila Bulletin
The country’s power generation companies (GenCos) and distribution utilities (DUs) are seeking financial assistance from the government so they can prevent collapse of operations or bankruptcies as their cash collections are deferred toward year-end because of government enforcements following the coronavirus-linked lockdown in the country.
Energy Secretary Alfonso G. Cusi
Energy Secretary Alfonso G. Cusi revealed in a hearing of the Joint Congressional Energy Committee (JCEC), that “our industry players need financial assistance. I have discussed this with our DOF (Department of Finance) Secretary and we are depending on the bankability of the generation companies, distribution companies, the transmission company to help extend credit to our consumers.”
For the DUs of which bill payments have been subdivided into four and six-month installments, their plea is for government to extend interest-free bridge financing with payment terms that could be stretched for one year.
Atty. Ranulfo Ocampo, president of the Philippine Electric Plant Owners Association (PEPOA), told lawmakers that they are asking government “to provide financial assistance of interest free loans to distribution utilities to bridge finance their capital requirements.”
He said “the interest free loans be payable in 12 equal monthly installments starting January 2021 so we can have breathing room at least for the consumers and the distribution sector as we return to new normal period after COVID-19.”
In the case of the GenCos, Atty. Anne Estorco-Montelibano, president and executive director of the Philippine Independent Power Producers Association, Inc. (PIPPA), noted that the industry is now confronted with very perilous chance of financial survival, because their collections had been held up, yet on the contrary, they will need to continuously pay their fuel suppliers and lenders – some of which are foreign entities and could not extend level of flexibility that could match the delay in payments being enforced by the Philippine government.
“In the long run, extended payment flexibilities will take a toll on their operations,” Montelibano said, and “the alternative may be to close shop or to cease investing in new power plants.”
She qualified that while industry players have been prevented from pursuing collections during the more than two months of lockdown or enhanced community quarantine (ECQ) in the country due to the coronavirus pandemic, “there was no pause on the generation companies’ fixed costs in the form of debts, bank loans, insurance, labor, maintenance, fuel taxes and the like.”
And despite that, she narrated that the power generators “adapted and continue to make ends meet in compliance, support and solidarity with the industry.”
The reality being faced by the power firms, according to Montelibano, had been that while “we are complying with the extension of payment and the four-month installment mandated by the ERC (Energy Regulatory Commission) and DOE (Department of Energy)… we have experienced difficulty in our own suppliers and creditors, where some, naturally affected by pandemic, are unwilling to extend payment flexibilities.”
