OLONGAPO CITY—The state-run Private Sector Assets and Liabilities Management Corp. (Psalm) has asked the National Grid Corp. of the Philippines (NGCP) to disconnect this city from the Luzon power grid due to unpaid debts amounting to P5 billion.
In compliance with the directive, the NGCP, which operates the country’s power transmission system, advised the city government that it would disconnect power at noon on Wednesday. It did not do so, however, when Psalm earlier issued a disconnection notice on June 25.
Mayor Rolen Paulino said the city would appeal the decision of Psalm, a government agency tasked with selling assets of the National Power Corp. (Napocor) to the private sector.
Last week, the city council approved a debt restructuring plan that was different from the draft agreement between the city government, as represented by then Mayor James Gordon Jr., and Psalm.
Paulino said the council approved the release of P20 million a year to the agency and
P2 million a year to pay the city government’s debts to San Miguel Energy Corp. (SMEC), energy arm of San Miguel Corp.
“We’re also asking Psalm to give us time to assess, whether this P5-billion debt is real and how [it was incurred]. We also have to know whether Olongapo has the financial capacity to pay the debt,” the newly elected mayor said.
Emmanuel Ledesma Jr., Psalm president and chief executive officer, informed Gordon and the city council on June 18 that the city government had until June 25 to settle its obligations that had gone up to P5.082 billion as of May 31, before it cuts Olongapo’s power supply.
City officials said the debt included the accumulated arrears of the police, public schools and other facilities administered by national government agencies. Gordon said the amount ballooned due to systems losses and interests arising from the unpaid obligation.
Gordon had presented to the council a draft restructuring agreement to settle a portion of the debt from the sale of the Public Utility Department (PUD), which used to distribute electricity in the city.
PUD was sold for P610 million to Olongapo Electricity Distribution Co. Inc. (OEDC), which was given a 25-year franchise to take over the city’s power distributor.
Records showed that the council had allocated P500 million from the profits from the PUD sale to settle a portion of the city’s debt to Psalm. At least P50 million has been set aside for retiring PUD workers and another P60 million to pay Olongapo’s debts to SMEC.
Jose Abaya, OEDC president, confirmed the NGCP notice of power disconnection. “But NGCP knows [the PUD] had been transferred to the OEDC and recognizes the complexity [of the issue]. Psalm may request [for the disconnection] but it will be NGCP to decide whether to disconnect [power in the city] or not,” he said.
Napoleon Viterbo, head of the NGCP district that covers Olongapo, confirmed that power supply would be cut off by Wednesday noon.
Abaya said it would be up to Psalm to see if the payment arrangement under the city resolution for debt restructuring is acceptable. “If it’s OK, then they can withdraw the request for disconnection,” he said. Robert Gonzaga, Inquirer Central Luzon