PSALM is now Napocor 11

Aroutine check into why the Power Sector Assets and Liabilities Management (PSALM) has been filing petitions for power rate increases with reckless abandon led former colleague and now Eastern Samar Rep. Ben Evardone into a closet full of skeletons.

The skeletons have piled up in a decade-old story, from the horrors of the bankruptcy of the National Power Corp. (Napocor) early in the new millennium (which led to its abolition) to the various indiscretions of PSALM, which was precisely created to clean up the horrific mess left behind by Napocor.

As Rep. Evardone wrote a chronology of what took place over the past ten years, hoping along the way that he would not be shocked by his discoveries, what he found out was a stunning tale of three things: unexplained sums of money in billions and in dollars at that, gross mismanagement that was abetted by zero accountability and transparency, and the brutal wage of the two sins—public burden through higher electricity rates.

The Napocor was run to the ground by the combustible mix of corruption and mismanagement. The PSALM of today is seemingly bent to top the worst of Napocor’s sins. All of these, were laid out by Rep.
Evardone in a recent speech that sought an in-depth inquiry into the affairs of the PSALM. Among his findings:

Right after its creation—with the precise mandate to clean up after Napocor’s mess—the PSALM auctioned off 90 percent of the assets of the Napocor and generated a total of $10.6 billion in proceeds.

With all the proceeds in, the PSALM can effectively wipe out Napocor’s debts, which totaled $9.3 billion.
There would be spare money left to pay up the entire cost of running PSALM, even with moderate bonuses to officials and staff.

The PSALM initially pre-paid $1.3 billion of the debts. Then, it got a timely succor from the national government, which absorbed some $4 billion of the total obligation in 2004, a move that helped PSALM cushion the debt repayment burden.

After the absorption, the reduced Napocor debt just stood at $5.5 billion in 2004. With more proceeds from the auctioned assets coming, clearing up the Napocor’s remaining debt was deemed forthcoming.

Instead of wiping up Napocor’s debt, Rep. Evardone found out that in 2007, total Napocor liabilities still stood at $7.1 billion, barely changed from the original obligation of $9.3 billion.

And in 2009 and this year, the PSALM incurred new loans with a total of $2.8 billion allegedly to finance maturing debts and pay off operating expenses.

“The math of PSALM just did not add up,” he said, as he tried to find his way through the hazy and voodoo figures of the PSALM.

What happened to the auction price of $10.6 billion? “Did it vanish in thin air? Did it line up pockets, the usual story? Was the money grossly mismanaged? Or, was it diverted elsewhere?“

These questions are begging for answers, Rep. Evardone said in his speech.There are clearly hideous and ghastly things about PSALM that the public should now.

But the part of PSALM that is public knowledge is also as distressing. The PSALM, unable to fulfill its mandate to clean up Napocor’s mess, piled up more blunders into the original house of horrors. Then—this is the clincher—it filed four (yes, four) petitions for power rate increases before the Energy Regulatory Commission, citing stranded costs and stranded contract costs as official reasons.

In short, the PSALM said that it should be rewarded with power rate increases for bungling its job—with the public shouldering the wages of its sins.

The first petition seeks a 39 centavo a kwh increase in electricity cost for 17 years and this is intended to raise P470 billion for the PSALM from consumers.

The second seeks a one-time, big-time increase of 86 centavos a kwh, effective for one year.

The third one, this time invoking stranded contract cost, seeks a 18 centavo a kwh rate increase for three years to raise P26 billion. The fourth, also citing stranded contract cost, seeks a.092 a kwh increase to for five years to raise P22 billion.

Even in the already sad chro-nicles of indiscretion and blunders by public corporations, we had no precedent for the horrible saga of PSALM’s, a liquidator, turned financial train wreck, said Rep. Evardone.
Indeed, an in-depth inquiry should be done. –MARLEN V. RONQUILLO, Manila Times

mvrong@yahoo.com