2 provinces face blackouts due to power debts

MANILA, Philippines–The provinces of Davao del Norte and Compostela Valley face massive power outages should the Power Sector Assets and Liabilities Management Corp. (PSALM) pull the plug on the Davao del Norte Electric Cooperative Inc. (Daneco), which owes the former more than P500 million.

PSALM, a state corporation, said it had asked the Department of Energy (DOE) for approval to issue a notice of disconnection to Daneco, after which the date of disconnection would be announced.

“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 lapsed on March 21,” PSALM president and CEO Emmanuel R. Ledesma Jr. said in a statement.

Failure to comply

Ledesma said Daneco, whose accounts were transferred from the National Power Corp. to PSALM in June 2009 when its debt was about P230 million, had failed to comply with its financial obligations under power supply agreements and contracts.

Daneco has said that beginning in June 2012 its operations were affected by the legal dispute between the Daneco-National Electrification Administration (NEA) group and the Daneco-Cooperative Development Authority (CDA) group, and by Typhoon “Pablo” in Davao del Norte and Compostela Valley—the areas served by the power firm.

In June 2013, PSALM and Daneco-NEA entered into an agreement for the three-year restructuring of Daneco’s obligation amounting to P275 million as of March 31, 2013. The monthly amortization was set at over P8 million covering the months of May 2013 to April 2016. Daneco-NEA has reportedly been religiously paying this amount.

Unpaid bills

Daneco, however, continued to incur unpaid power bills as the Daneco-CDA group’s payments were not up-to-date, with the last payment made in December 2013.

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 nonpayment of monthly billing in the amount of P820,000, and monthly amortization on the restructured account of P8.15 million.

Its average monthly payment was only P64.36 million, or 69.76 percent of its average monthly billings. As a result, Daneco’s total outstanding obligation totaled P576 million as of April 30, 2014, PSALM said.