PNoy condones chunk of Pagbilao Power’s P6-B debt

President Benigno Aquino III has condoned part of the P6-billion debt owed by Pagbilao Power Station to Quezon province, Malacañang said Tuesday. The utility supplies almost a tenth of Luzon’s power needs. The President on February 28 signed Executive Order (EO) 27, which reduces and condones the real property taxes, interests, and penalties the power station owes the provincial government. Palace spokesperson Edwin Lacierda said the national government will pay a reduced amount of P678.7 million, of which 41 percent will go to the provincial government and the rest to Pagbilao plant operator Team Energy Corp., which had advanced P400 million. Team Energy on Tuesday hailed the EO, and said it was actually issued days before the coal plant’s scheduled auction Wednesday. The Quezon government had threatened not to renew Team Energy’s business permit unless it pays its obligations from 1997 to 2010, and that the Pagbilao property would be auctioned off to cover its unpaid dues. Curbing debt’s effects on consumers EO 27 aims to curb the debt’s consequences on consumers as well as government-owned and -controlled corporations. The EO says the “forcible collection" of real property taxes by local government units will raise the cost of electricity and trigger “massive direct liabilities" on the part of the National Power Corp. (Napocor) and the Power Sector Assets and Liabilities Management Corporation (PSALM). It may also “trigger further cross-defaults and colossal economic losses across sectors," the order says. Lauding the EO, Team Energy external affairs manager Froilan Gregory Romualdez said, "This decision by the national government will benefit residential and industrial consumers of electricity by preventing a sudden escalation in the retail cost of power. Ultimately, this serves the larger public interest." The Energy Conversion Agreement mandates the Napocor – which had operated the Pagbilao Power Station before its privatization – to shoulder the taxes the government will impose on Pagbilao. Trumpeting Team Energy’s track record in paying its obligations, Romualdez noted that the EO does not absolve the company of its liabilities. "We wish to make it clear that this EO reduces liabilities owed by the national government – through the Napocor and PSALM – to the province of Quezon and not of Team Energy," Romualdez said. After Napocor had passed it on, the power plant changed managements more than twice until the Japanese-controlled Team Energy took over the 735-megawatt coal-fired facility. Consultations to resolve issue The national government consulted the Quezon provincial government and the private investors before it issued the EO, said Presidential Communications Development and Strategic Planning Office Secretary Ramon “Ricky" Carandang. Carandang said the consultations aimed to “resolve this issue in a way that the Quezon government is happy, that the investors will not be inconvenienced." The secretary had earlier said that if the Pagbilao auction pushed through, “it will massively undermine investor faith in the Philippines." http://www.gmanews.tv/story/211008/govt-to-condone-some-of-pagbilao-powers-p6-b-tax-liabilities Pagbilao Power can produce 16.8 million kilowatt hours (kWh) of electricity a day or over 6 billion kWh a year. The power plant feeds the Luzon grid via a 230-kilovolt transmission line and the Napocor sub-station in Tayabas, Quezon. — With a report by Amita Legaspi/PE /VS, GMA News