Malampaya fund to retire PSALM debts

By Myrna M. Velasco

The universal charges on stranded debts and stranded contract costs in the electric bills of Filipino consumers will soon disappear, with Congress already tapping the use of the Malampaya fund to retire the monstrous debts of Power Sector Assets and Liabilities Management Corporation.

Senator Sherwin Gatchalian (Facebook / MANILA BULLETIN) Senator Sherwin Gatchalian

In a legislative measure that already passed third and final reading in the Senate, P207 billion of the Malampaya fund had been permitted to be applied in expunging power sector liabilities that were placed under the charge of the state-owned firm.

Based on calculations, this legislative branch-sponsored policy will reduce the bill of residential end-users within the 200-kilowatt hour consumption bracket by as much as P169.48 per month or aggregated P2,033.76 annually.

The bill has been dubbed “Murang Kuryente Act,” although long-time industry watchers and experts view it as “the high price that Filipino consumers have been paying” relative to the failings committed in the privatization of the National Power Corporation (NPC) assets.

Some NPC facilities were divested on a “fire sale” – including the independent power producer (IPP) contracts, of which capacity fees (or the cost of building the power plants) had not been given as burden to the asset buyers, yet they will assume ownership of the power facilities at “zero cost” at the end of the supply contracts. Those corresponding costs were instead passed on to the Filipino consumers.

Senate committee on energy chairman Sherwin T. Gatchalian guaranteed “check and balance” mechanisms in the use of the funds, with him emphasizing that the first step will be to use first the privatization revenues generated from divestment of power sector.

Notably, as of end-December 2018, the total liabilities of PSALM were still at whopping P449.94 billion, which infers then that the P207 billion allocation from the Malampaya fund won’t still be enough to wipe out all of it.

“PSALM may only tap the fund after it has already applied the collections from its different sources of revenue,” the lawmaker said.

On the Malampaya fund’s application to PSALM debt servicing, he stated that such shall be earmarked via the General Appropriations Act or the national budget that also goes through the approval of Congress.

And if the energy resource special fund would still have surplus after paying off PSALM debts, this could be funneled to the government-underpinned electrification and household power service connections across the country.

Gatchalian opined that the bill gives leverage to the Filipino consumers to benefit also from the Malampaya fund, which accounts for the royalty share of the State in the country’s commercial scale gas field.