Power co-ops owe PSALM P30B

MANILA, Philippines - The debts owed by electric cooperatives to state-run Power Sector Assets and Liabilities Management Corp. (PSALM) have reached roughly P30 billion, according to sources from the Department of Energy.

Last year, debts of cooperatives amounted to only P14 billion but sources said the debts have already ballooned by more than 50 percent because of mismanagement and intervention by politicians in the cooperatives’ host provinces.

Sought for comment, Energy Secretary Carlos Jericho Petilla said the Philippine government won’t condone the debts of electric cooperatives.

“The Republic will not condone these loans,” Petilla said.

He expressed hopes that the new law strengthening the charter of the National Electrification Administration (NEA) would help address the problem.

He said the NEA, with a stronger charter, should now be able to predict or assess which cooperatives would default at a certain period and not act only when it has defaulted on its financial obligations.

“NEA should be able to have a monthly projection for the next 20 years for each EC’s revenues and losses to determine if it would default and why it would default,” Petilla said.

Projections should take into account, the cooperative’s demand projections, salary of its officials and system losses to be able to come up with the monthly projection, Petilla said.

Last May, President Aquino signed into law the measure that strengthens NEA through charter amendments.

Republic Act 10531 or An Act Strengthening the National Electrification Administration, Further Amending for the Purpose Presidential Decree 269, as Amended Otherwise Known as the National Electrification Administration Decree, was signed on May 7, 2013.

The new law essentially gives NEA greater power over electric cooperatives, some of which are losing money and incurring heavy debts because of mismanagement and unpaid services.

For instance, the law strengthens NEA’s authorized capital stock to P25 billion from P1 billion.