STATE-LED Power Sector Assets and Liabilities Management Corp. (PSALM) will “vigorously” go after independent power producer administrators (IPPAs) with delinquent accounts amounting to P33.62 billion, the Finance department said on Sunday.

DoF Undersecretary for Legal Affairs Bayani H. Agabin said in a press release that Finance Secretary Carlos G. Dominguez III, who chairs PSALM, had ordered the agency to initiate collection cases versus former IPPAs that have existing unpaid dues.

In 2019, PSALM collected a total of P70.41 billion from IPPAs, or private entities that manage the output from the energy conversion the power purchase agreements that National Power Corp. (Napocor) entered into with the independent power producers.

IPPAs are appointed through public bidding conducted by PSALM, a corporation created by law to privatize the power generation assets of Napocor that were built during the crippling energy crisis in the 1990s.

The Department of Finance (DoF) identified a unit of San Miguel Corp., South Premiere Power Corp. (SPPC), as having the highest unpaid account at P23.94 billion as of Dec. 31, 2019. SPPC administers the capacity of the Ilijan gas-fired power plant in Batangas City.

In a pending case before the Regional Trial Court of Mandaluyong City, SPPC is asserting another formula for computing its payables to PSALM. The case has been pending since September 2015.

Other companies with existing delinquent accounts include Unified Leyte Strips of Energy’s IPPAs with Good Friends Hydro Resources Corp., which got its contract terminated in August 2017, and has unpaid dues of P1.21 billion, as well as the Waterfront Mactan Casino Hotel, Inc. that had its contract terminated in October last year, owing PSALM P87.74 million.

The DoF quoted PSALM President Irene Joy Besido-Garcia as saying that if the agency is not able to collect the “hefty financial obligations” from delinquent accounts, it will be forced to contract new borrowings to liquidate Napocor’s maturing debts.

She described the new borrowings as a “vicious cycle that will result in PSALM absorbing additional interests and other finance charges.”

The other IPPAs that PSALM is calling out to pay are Filinvest Development Corp. (FDC) Utilities, Inc. for the Unified Leyte Strips of Energy contract and FDC Misamis Power Corp. for the capacity of Mindanao I and II Geothermal Power Plants, by P1.17 billion and P2.63 billion, respectively.

Vivant-Sta. Clara Northern Renewables Generation Corp. (Northern Renewables), administering the IPPA agreement for the Bakun Hydroelectric Power Plant in Ilocos Sur, also has an unpaid obligation of P4.19 billion,according to the DoF.

“PSALM expects to collect additional payments from Northern Renewables this 2020 in view of a settlement agreement they had submitted to the court,” it added.

According to its report, PSALM’s average cost of borrowing for last year was 5.07%, with total revenues collected reaching P98.3 billion, leaving P422.2 billion worth of remaining debt from Napocor that PSALM needs to raise money for.

The DoF said a failure to meet the P33.62-billion collection target this year would translate into an annual borrowing cost of P1.7 billion, which could have been used to fund government programs.

The delinquent accounts are part of the P95 billion that IPPAs and other industry players such as electric cooperatives owe to PSALM, including the receivables it inherited from Napocor, according to Ms. Garcia. — Beatrice M. Laforga

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