PSALM, electric co-ops ink deal for debt writeoff

The Power Sector Assets and Liabilities Management Corp. (PSALM) and the National Electrification Administration (NEA) have signed over the weekend a memorandum of agreement (MOA) that will allow PSALM to condone some P18-billion loans of electric cooperatives (ECs).

"Under the law, we have to condone some co-op loans so we signed a MOA with NEA," PSALM president Edgardo del Fonso said.

Del Fonso, however, clarified that only those ECs that will meet the requirements set by NEA and PSALM will be qualified for the loan condonation.

"This is a MOA and it is not yet final. We still have to audit the books of the co-ops," he said.

According to the PSALM official, the loan condonation will result to a reduction in power rates for customers of the cooperatives.

"The idea is those that we will condone will be passed on to consumers and we’d lower tariff," he said. "Benefits will go to the consumers not to the coop."

President Arroyo issued EO 119 or the Restructuring Program for Electric Cooperatives in August last year, which among others, authorizes the condonation of ECs rural electrification loans incurred as of June 26, 2001.

In issuing EO 119, however, President Arroyo stressed that necessary, radical and lasting reforms should be made to achieve reliable, secure and cheaper electricity for all consumers, particularly in the rural areas.

The condonation of loans should cut power rates in the provinces by about 10 to 70 centavos per kilowatt hour.

Of the total 119 ECs, 23 cooperatives partially complied with EO 119 and another 21 showed dismal performance.

The President said a second assessment will be done to the 23 ECs that partially complied with the requirements. These ECs will also be given more assistance to fully improve their performance.

"For those ECs that miserably failed to achieve their targets, it will be the height of injustice for us decision makers, to allow these 21 ECs to continue subjecting their people to difficulty and distress," she said. – Donnabelle Gatdula