Senators scold Psalm officials over P 78.8-B loan
MANILA, Philippines — Senators on Thursday expressed dismay over revelations that the government is being forced to take on loans and pay for interest costs as it seeks to offer lower electricity costs to Filipino consumers under Republic Act No. 11371, or the Murang Kuryente Act (MKA).
Sen. Sherwin Gatchalian, chair of the Senate committee on energy, chided executives of the Power Sector Assets and Liabilities Management Corp. (PSALM) for taking on a P78.8-billion loan, with P21.6 billion in interest, that will ultimately be paid by Filipino taxpayers.
“It’s like we’re just going in circles because while we don’t see [universal charges] on our electricity bills anymore because of the [MKA], a portion of our taxes will still go to interest payments,” he said.
Gatchalian made the remark during the budget briefing of the Department of Energy and its attached agencies, including government-owned and -controlled corporations tasked to provide affordable electricity to Filipino consumers.
For 2022, PSALM is seeking Congress approval of its proposed budget of P198 billion.
Gatchalian reminded the Department of Finance that the objective of the MKA is to avert the government incurring added costs from loans, while lowering the cost of power.
“That’s not the spirit of the [MKA] because the spirit is for us to save on P21.67 billion; instead we incurred an additional P21 billion. So, in effect, this is really a double whammy,” he said.
Sen. Nancy Binay wondered whether Filipino consumers would still benefit from the Malampaya funds because of the costs that the government had to bear from the loans that PSALM had undertaken.
According to lawyer Irene Joy Besido-Garcia, PSALM president and CEO, the firm sought a funding of P76 billion to shoulder “stranded costs” and “stranded debts” which were previously passed on to power consumers as “universal charges.”
However, only P8 billion was approved in the National Expenditure Program, which prompted PSALM to resort to borrowings, in the amount of P76 billion, Besido-Garcia said.
She agreed that the objective of the MKA was to stop PSALM from further borrowings and avoid incurring additional borrowing costs.
“The problem is because of the pandemic, I think the fiscal space [of the government] became very tight, so they [economic managers] only gave us P8 billion so we have to borrow for this year,” she said.
Gatchalian questioned why PSALM took on a loan which, he said, was “too expensive.”
For a four-year loan of P79 billion, PSALM would have to pay P21.67 in interest, which, Gatchalian said, is nearly a third of the principal amount.
Besido-Garcia said the high-interest rate was caused by the short loan term, which coincides with the remaining life span of PSALM.