PSALM eyes sale of NGCP receivables to lower electricity rates

The Power Sector Assets and Liabilities Management Corp. (PSALM) has engaged some banks in talks on the sale of some receivables of the National Grid Corporation of the Philippines (NGCP) to lessen the universal charge in electricity bills. The government may use the receivables from the concession contract of the NGCP, according to PSALM spokesperson Julie Domino, who explained that selling the receivables ahead of the scheduled payment of NGCP may help in the efforts to reduce the universal charge (UC). Domino disclosed that PSALM is in talks with various banks and other financial institutions to explore options on selling the receivables of NGCP. She said the government may not need the NGCP's approval of this scheme. Domino also said all existing power contracts, including the concession of NGCP, are being reviewed so that government can further reduce the cost of electricity. “The universal charge is a social payback to the efforts of the government to provide affordable power rates and to resolve the power crisis that virtually crippled the country’s economy in the past," the PSALM spokesperson explained. 39-centavo universal charge PSALM recently sought Energy Regulatory Commission approval to collect 39 centavos per kilowatthour as a universal charge to recover stranded debts and contract costs the National Power Corp. bore over time. This cost recovery approach, Domino explained, is provided in the Electric Power Industry Reform Act (EPIRA). Stranded debts, according to EPIRA, are unpaid financial obligation of Napocor that have not been liquidated by the proceeds from the privatization of the generating firm’s assets. Stranded contract costs are the excess of the contracted cost of electricity under eligible contracts over the actual selling price of the contracted energy output. Domino said PSALM can go ahead with its receivables sale and only give NGCP notice. “We may give them notice. The decision to carry out this scheme would be decided upon by PSALM and the banks or financial institutions that would be buying these receivables at a discounted rate," the PSALM spokesperson said. PSALM had asked Congress to extend its corporate life so it can stretch the payment of universal charge to 25 years from its proposed 15 years. The EPIRA law gave PSALM a corporate lifespan that will run out in 2026. — ELR/VS, GMA News