Local firms start skipping payments for water, power

Published by rudy Date posted on February 14, 2009

MANILA, Philippines – Local companies have been affected by the downturn in the world economy as an estimated 30 percent of domestic firms have outstanding liabilities to utilities firms, the Federation of Philippine Industries (FPI) said.

In an interview, FPI president Jesus L. Arranza said the financial crisis has led companies to miss on a few payments for their water and electricity bills.

Arranza said this weighs down companies which are already having a hard time coping with the current situation.

“We must do something to help them survive. They must be allowed to cut costs,” Arranza said.

He proposed giving firms leeway in paying their outstanding bills. “Maybe the companies who are already in the red can be allowed to pay their current bills before settling their outstanding obligations,” Arranza said.

Arranza said the proposed moratorium on outstanding utilities bills will only be good for six months. After that time, he said firms must be able to continue servicing their debt.

“We are asking the government owned utilities firms to spearhead this movement. In times of crisis we need to stand together,” he added. Arranza said state-owned National Power Corp. (Napocor) should lead the implementation of the moratorium. “We need to help each other and we are calling on the government to be more understanding and set an example for other utility companies.”

By doing this, Arranza said lay offs and salary cuts may be avoided. “There will be lesser lay offs and pay cuts because the firms will be able to save on their operational costs,” Arranza explained.

“We cannot allow firms to fail and lay off workers. This is not the time to think of profits. We only need to survive,” he said. Arranza said the goal now is to breakeven or get minimal margins. However, he said what is important is to not do things that will result in job losses.

Arranza said not paying outstanding bills and limiting payments to current consumption will bring up to 40 percent savings to companies. He said because it is a moratorium, the loan must not incur any interest during the six month break.

Arranza said for most of the industries, utility costs are greater than labor costs. Unfortunately, it is easier to reduce the workforce than to risk losing electricity or water because this will hamper operations more.

In order to make it worthwhile for privately owned utilities firms like Lopez-led Manila Electric Co. (Meralco) or Transco to implement the moratorium, Arranza suggested giving incentives.

“Maybe the government can make it attractive for the utility firms to participate in this. The most important thing is we work together in order to get pass this crisis,” Arranza said.–Ma. Elisa P. Osorio, Philippine Star

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