PSALM demands payment from LGU

By Bernadette D. Nicolas – December 8, 2020
from Business Mirror

State-run Power Sector Assets and Liabilities Management Corp. (PSALM) prodded the Olongapo City Government to pay its long overdue obligations worth at least P6.713 billion in electricity bills and other charges over a 12-year period.

Olongapo City was given 7 calendar days from receipt of the formal and final demand letter to pay its arrears or face legal action, according to the final demand letter sent by PSALM President-CEO Irene Besido Garcia and acting Vice President for Finance Manuel Marcos Villalon II to Olongapo City Mayor Rolen Paulino.

Should Olongapo City government fail to pay “demanded overdue amount within the prescribed period,” Garcia and Villalon told  Paulino that PSALM will be constrained “to avail of all appropriate legal remedies to protect PSALM and the Government’s interests, including the filing of criminal, civil and administrative cases” against him and other local government officials of the city.

Copies of the final demand letter were furnished to Finance Secretary and PSALM Chairman Carlos G. Dominguez III, Energy Secretary Alfonso G. Cusi and DILG Secretary Eduardo M. Año, the Department of Finance said in a statement on Monday.

Moreover, PSALM said in the letter to Paulino that Olongapo City incurred the following long-due obligations: 1) power bills with interest and value-added tax (VAT) amounting to P5.66 billion; 2) Default Wholesale Supplier Arrangement charges with interest and VAT, P813.77 million; 3) Deferred Accounting Adjustment charges with interest and VAT, P230.71 million; and 4) VAT on the Automatic Cost Recovery Mechanism True Up (ACRM), P8.72 million.

In May 2019, PSALM first sent a final demand letter to the local government unit (LGU) to pay arrears amounting to P6.18 billion, which remain unpaid for over 9 years. In response, the LGU remitted P20 million in July and December last year but still left a substantial amount of arrears unpaid. This led to arrears ballooning to P6.713 billion as of July this year and will continue to increase if it remains unpaid, PSALM said.

Documents from PSALM show that it sent the first of a series of final demand letters to the Olongapo City Government in April 2012, when the LGU’s arrears amounted to only P3.58 billion.