By Myrna M. Velasco
The Bureau of the Treasury (BTr) will be resorting to fresh round of borrowings for the P208 billion allocation that state-run Power Sector Assets and Liabilities Management Corporation (PSALM) will be needing to reduce or cease the pass-on of its universal charges (UCs) in the electric bills.
In an interview with reporters, PSALM President and CEO Irene Joy B. Garcia indicated that the funneling of funds to PSALM will be done multi-year, and the program of borrowings by the treasury bureau will also be timed accordingly.
In line with the prescriptions of the Murang Kuryente Act that targets to wipe out UC components on stranded contract costs (SCC) and stranded debts (SD) in the electric bills, the concerned agencies have at least 90 days to craft the implementing rules and regulations (IRR) of the rate reduction law.
That process, Garcia said, started August 8 this year upon the passage of the law and is targeted to wind up this November.
“At the moment, what we’re doing is we’re having a lot of coordination meetings,” the PSALM chief executive has emphasized.
She qualified that the thrust of discussion is “to find out exactly what is the process flow of funds,” noting that the agencies involved include the Departments of Finance, Budget and Management, Energy and the Bureau of Treasury.
At this juncture, according to Garcia, what is certain is for the funds to be raised through borrowings because the intended Malampaya fund use for the UC cost absorption needs to be replenished.
“There will be P208 billion allocation cap for us to be able to use that for our maturing obligations. That’s going to come from national government borrowings – the Bureau of Treasury will have to include it in its sourcing of funds,” Garcia explained.
She noted that new borrowings will have to be the recourse because the Malampaya fund is now just treated as “book entry” in BTr’s financial records.
“They will have to include that (UC cost absorption) in their borrowings. It (Malampaya fund) is a book entry in the sense that you don’t have money lying around, so the funds are fungible. And in the scheme of things, that is now in its asset portion,” she said.
When asked if the UC reduction in the rates can already be implemented next year, Garcia told a budget hearing in the Senate that the allocation for such was no longer included in the budget of DBM for year 2020.