Stranded IPP debts pile up to P471B — FDC
10/31/2010The so-called stranded electricity costs which were the result mostly of onerous contracts with independent power producers (IPPs) during the term of former President Fidel Ramos had ballooned to P471 billion and the government is now at a loss on how to pay off the huge amount.
State power assets holding firm Power Sector Assets and Liabilities Management Corp. (Psalm) had sought authority with the Energy Regulatory Commission (ERC) to spread out the collection of the amount for 17 years to be tagged on monthly electricity bills but the current Psalm officials appointed by President Aquino now wanted to withdraw the petition that would have translated to more than 30 centavos per kilowatthour increase in power rates.
The Freedom from Debt Coalition (FDC) asked Psalm to totally withdraw the stranded debts and contract costs recovery petitions before the ERC to protect the welfare of electricity consumers and challenged the Aquino administration to renegotiate the terms of the IPP contracts. The culprit for the ballooning debt of state power firm National Power Corp. (Napocor) with the IPPs is the so-called take or pay provision in the power contracts which required the government to pay a fixed amount to IPPs even if the power plants do not actually supply electricity.
Recently-appointed Psalm president Emmanuel Ledesma Jr. had announced in a press conference about the firm’s plan to withdraw its P471-billion stranded debts recovery bid and three other applications which had been initially intended for pass-on to consumers under the universal charge (UC) component of the electric bills..... MORE
Source: The Daily Tribune
URL: http://www.tribuneonline.org/headlines/20101031hed3.html
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