DOE seeks ‘plan B’ amid PSALM money woes

DOE Secretary Jericho Petilla. AP FILE PHOTO

With Power Sector Assets and Liabilities Management (PSALM) Corp. facing financial troubles, the government is seeking options in dealing with a potential power supply problem in 2015, Department of Energy (DOE) Secretary Carlos Jericho L. Petilla said.

“We are studying options to make sure Malaya’s operation is not affected by the Dama (Napocor-Drivers and Mechanics Association) case,” Petilla said in a text message. “We are also looking into the supply implication of Kalayaan and Ilijan.”

PSALM has received a court order to pay P60.24 billion to Napocor-Dama, whose members were affected by the energy sector’s deregulation and National Power Corp.’s (Napocor) subsequent reorganization in 2003. The sheriff of the Regional Trial Court (RTC) of Quezon City also sent private sector power generation administrators and distributors notices of garnishment requiring them to report the existence of PSALM funds in their possession, for garnishment or seizure.

This could hurt PSALM’s funds and hamper its operations, officials said.

PSALM president and CEO Emmanuel R. Ledesma Jr. admitted this could curtail even PSALM’s ability to help secure back-up power for 2015 in case it needs to lease diesel power generation facilities in the event of a power crisis. However, he said the more pressing problem is how to keep paying Napocor’s debts as they fall due, and how to keep buying fuel for state-owned power plants and those of independent power producers’.

“Actually that [power plant lease] is the least of our worries. If the income of PSALM is garnished, they will not have enough funds to purchase fuel,” Petilla said. “The major plants that might be affected are Ilijan, Kalayaan, and Malaya. But in particular, Malaya will be most hard hit without fuel purchase.”

The absence of the 350-megawatt  Unit 2 of Malaya could add to power problems next year, Petilla said, in addition to at least 600 MW needed to plug the power gap.

“The problem is we had counted on [Malaya 2] to run in 2015 and despite that we still have a shortfall in supply. If Malaya 2 happens not to run, the shortfall will be worse,” Petilla said.

The court notices were sent to implement a 2008 Supreme Court decision that was recently upheld with finality. The settlement on the severance pay and back wages of Dama members has ballooned to P60.24 billion from P34.7 billion when the original ruling was issued.

Ledesma is adamant that government funds dedicated for specific public uses may not be diverted for other purposes and seized under writs of garnishment to satisfy monetary judgments by courts. Instead, he said, all disbursements of public funds should be covered by an appropriation from Congress in order to avoid disruption of public functions. Ledesma also said that a money claim against the government should first be filed with the Commission on Audit given its primary jurisdiction to examine, audit and settle all claims against the government.

The 2001 Electric Power Industry Reform Act unbundled Napocor, making way for the creation of PSALM to privatize or sell off Napocor’s assets and pay its debts. Napocor employees were terminated as part of its reorganization and, although many were rehired in February 2003, the workers contested that they got lower pay and that new arrangements increased contractualization in their workplace.