PSALM assumes power cooperatives’ debt worth P12B

STATE-RUN Power Sector Assets and Liabilities Management Corp. recently assumed about P12 billion of what rural electric cooperatives owed the National Electrification Administration, local governments and other government agencies, as of end-April this year.

According to the 18th status report on the implementation of the Electric Power Industry Reform Act of 2001, the amount accounts for around 66 percent of the electric cooperatives’ loans that PSALM is supposed to assume under the law.

Government data showed that PSALM is supposed to absorb P18.07 billion worth of loans incurred by rural electric cooperatives. PSALM is yet to assume responsibility for the remaining P6.086 billion as of April 2011.

Under the Electric Power Industry Reform Act (Epira), PSALM is supposed to assume all outstanding financial obligations of electric cooperatives to NEA and government agencies.

To fulfill this mandate, which took effect in June 2001, PSALM would usually partner with other government agencies.

Also, Epira mandated the Energy Regulatory Commission to ensure that once the loans of electric cooperatives are taken on by PSALM, there would be corresponding reductions in electricity rates to benefit power consumers in rural areas.

Based on the report, PSALM has already remitted P11.911 billion to NEA, and P96 million to local governments and other state agencies.

Of the total payment made to NEA, 75.2 percent, or P8.958 billion, was used to pay the cooperatives’ rural electrification loans; 15.4 percent, or P1.836 billion, was for mini-hydro loans; and 9.3 percent, or P1.108 billion, for a plant that used firewood as fuel.