Lawmakers question PSALM’s debts

Lawmakers are asking why the  Power Sector Assets and Liabilities Management Corp. (PSALM) has piled up close to P100 billion in debt over the last six months and was planning to add another P78 billion next year.

Eastern Samar Representative Ben Evardone said that members of Congress were surprised during the budget hearing of the Department of Energy that PSALM’s debts had increased from $15 billion at the end of 2010 to more than $17 billion as of June this year.

“PSALM is actually worse off now than when  it was created 10 years ago when it had $15 billion in debt. It has more loans now and 98 percent of the National Power Corp.’s assets have already been sold. PSALM should explain why its loans have ballooned in such a short time because this will be surely passed onto consumers,” said Evardone in a phone interview.

PSALM was established  in 2001 under the  Epira law, or the Electric Power Industry Reform Act, as the state’s financial manager to handle the sale of its assets and restructure its debt in order to make power more affordable.

Doomed to fail

But with more loans and no more assets to sell, Evardone said that PSALM was doomed to fail as consumers were likely to suffer higher power rates noting that it has a pending application with the Energy Regulatory Commission to increase power rates to cover the P139 billion in stranded costs from 2007 to 2010.

PSALM wants the ERC to approve a 39-centavo-per-kilowatt-hour rate hike to cover these unpaid costs that include unpaid loans of National Power Corp. and the unpaid portion of the power bought from suppliers.

House Deputy Speaker Lorenzo Tañada III, a member of the Joint Congressional Power Commission, said that PSALM should explain in full the financial status of the company to justify its proposal to pass on its debts to consumers.

Tañada has also asked the Commission on Audit to look into the books of PSALM to comb through its expenses, including the surge in incentives and fees given to management, its lawyers and financial advisers.

Tañada  pointed out that PSALM’s professional service fees shot up nearly 10 times to P1.116 billion in 2009 from only P118 million the year before. Gil Cabacungan