PSALM demands payment of Daneco’s P500-M debt

MANILA, Philippines - The outstanding unpaid obligations of the Davao del Norte Electric Cooperative (Daneco) have ballooned to more than P500 million, the Power Sector Assets and Liabilities Management Corp. (PSALM) said over the weekend.

Thus, PSALM warned that the provinces of Davao del Norte and Compostela Valley being served by Daneco could face massive blackouts due to an impending disconnection.

PSALM has issued a final demand letter to Daneco for failure to comply with its financial obligations.

“After exhausting all possible remedies, PSALM has issued a final demand to Daneco for failure to comply with its financial obligations, and the period to comply with such final demand has already lapsed on March 21, 2014,” PSALM president and chief executive officer Emmanuel R. Ledesma Jr. said. 

The agency has already sought the approval of the Department of Energy for approval of the notice of disconnection to Daneco.

The notice of disconnection cites “the failure of a customer, as to this case of Daneco, to comply with its financial obligation with PSALM under their power supply agreements or any existing contracts for the supply of electricity and restructuring agreement.”

When the power accounts were transferred from the National Power Corp. to PSALM in June 2009, Daneco’s outstanding obligation amounted to about P230 million.

In March 2011, PSALM approved the restructuring of Daneco’s outstanding value added tax (VAT) account amounting to P106,556 million, with a monthly amortization of P4.4 million for a period of two years or from March 2011 to February 2013.

While the electric cooperative fully settled its VAT obligation, it has failed to fully settle its monthly power bills starting July 2012.

From March 2013 to April 2014, the average monthly billings of DANECO was P92.26 million, composed of monthly power bills amounting to P83.29 million, monthly interest charges due to non-payment of monthly billing.

Ledesma said the outstanding obligation is expected to continuously increase due to the shortfall in Daneco’s monthly payments to PSALM.