Business group backs bid to nix Napocor, PSALM bid

A Cebu business group is supporting the call of the Freedom from Debt Coalition-Cebu for the administration of President Benigno Aquino III to intervene and reject the proposal to increase the power generation charge.

Cebu Business Club president Gordon Alan Joseph said that he was supporting the Freedom from Debt Coalition-Cebu’s call for the national government to stop the petitions filed by the National Power Corporation (Napocor) and Power Sector Assets and Liabilities Management Corporation (PSALM).

Joseph said any increase should be made for a good reason.

“It is incumbent on all of us to make sure that price hikes are for good reasons. The FDC are helping fiscalize,” said Joseph.

Joseph was referring to the FDC-Cebu’s action against the proposed petitions by Napocor and PSALM seeking to recover stranded debts and stranded contract costs in the universal charge (UC).

They asked that a  portion of the contract cost of the UC in the amount of P74.298 billion be imposed at the rate of P 0.3666/kWh and stranded debts portion of UC in the amount of P65.019 billion at the rate of P 0.0313/kWh, said Jose Aaron Pedrosa Jr., FDC-Cebu secretary general, in a statement.

“The petition is simply asking approval to pass on Napocor’s debt, which amounts to P140 billion to power consumers. If approved, power rates would increase by P 0.39 per kWh,” said Pedrosa.

PSALM’s outstanding debt stands at P729 billion in August of 2011.

He said this would mean that there would be more petitions to be filed by Napocor and PSALM to recover these costs.

Pedrosa said if the administration wouldn’t intervene, then this would mean a continued increase in power rates in the next 15 years.

Joseph agreed with Pedrosa.

He cited the power rates of the Philippines as being one of the most expensive in Asia.

He said it ranked 5th in terms of global power rate standing.

Joseph said the government and stakeholders would need to control the costs of power by demand management.

“We can also use less expensive technologies in power generation like clean coal and hydro. Expensive power will be a disincentive to investors and local businesses,” said Joseph.

However, Eric Ng Mendoza, president of the Mandaue Chamber of Commerce and Industry, said he would prefer a shared responsibility approach to solving the power rate increase problem.

“I understand the heavy burden for consumers which raised another question, ‘can the government afford to absorb all that huge debt?’ Another approach is shared responsibility,” said Mendoza.

Mendoza said it would be better to sacrifice as a whole country than leave the government to find other solutions and put at risk the national credit image.

“Unfortunately, consumers will have to share even if we don’t agree, otherwise who will the creditors collect from. We do not want our government to be in default that may cause harm to our credit perception,” said Mendoza./Reporter Aileen Garcia-Yap