PSALM demands Olongapo LGU pay P6.7 billion in overdue debt

STATE-RUN Power Sector Assets and Liabilities Management Corp. (PSALM) wants the Olongapo City local government to pay within seven calendar days at least P6.71 billion in electricity bills and other charges incurred over the past 12 years.

In a statement on Monday, the Finance department said PSALM President-CEO Irene Joy J. Besido-Garcia and acting Vice-President for Finance Manuel Marcos M. Villalon II sent the final demand letter to Olongapo City Mayor Rolen C. Paulino, Jr.

The Olongapo City government was given seven calendar days from the receipt of the demand letter to pay the long overdue debt or “face legal action.” It was not clear when the letter was received by Mr. Paulino.

According to the Department of Finance (DoF), the city’s Public Utilities Department owes PSALM P6.71 billion as of July 31, 2020.

Broken down, the local government unit owes PSALM P5.66 billion in power bills with interest and value-added tax (VAT); P813.77 million in default wholesale supplier arrangement charges with interest and VAT; P230.71 million in deferred accounting adjustment charges with interest and VAT; and P8.72 million in VAT on the Automatic Cost Recovery Mechanism True Up.

If Olongapo City is not able to pay its arrears within the prescribed period, PSALM officials said they would have “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 the mayor and other local government officials.

To recall, the PSALM sent the first in a series of final demand letters to the Olongapo City Government in April 2012, when the latter’s debt stood at P3.58 billion.

In May 2019, PSALM sent another final demand letter to Olongapo City government, citing dues that reached P6.18 billion.

The state-run agency said that, although the unit remitted P20 million in July and December last year, there was “still a substantial amount of arrears left unpaid.” In July, the Olongapo City government’s financial obligations climbed to P6.71 billion.

As of press time, Mr. Paulino, the Olongapo City Mayor’s office, and the Olongapo City Information Office have not yet responded to BusinessWorld’s request for a comment.

PSALM has been working to collect billions in obligations from its power customers.

In 2019, the agency collected P98.37 billion in revenue and receivables last year, allowing it to slash its debt by P27.18 billion, exceeding targets. Of the total amount, PSALM collected P4.32 billion from overdue and delinquent accounts. — Angelica Y. Yang