Gov’t imposes sanctions on two electric cooperatives

POOR performance has led to the sanctions imposed by state-led Power Sector Assets and Liabilities Management Corp. (PSALM) on two electric cooperatives in Mindanao.

The Department of Finance (DoF) said in a statement on Wednesday that PSALM should stop giving free electricity to Maguindanao Electric Cooperative, Inc. (Magelco) and Lanao del Sur Electric Cooperative, Inc. (Lasureco).

The department said it is not PSALM’s mandate to subsidize electricity costs, neither does it have the budget to do so.

Finance Secretary Carlos G. Dominguez III chairs the PSALM board, which is also composed of some Cabinet secretaries and the president of PSALM.

Magelco will receive a reduction of energy allocation, while Lasureco will be disconnected from the Agus 1 hydroelectric power plant. Both sanctions took effect on May 26. They were ordered by the DoF, to be imposed by PSALM onto the two cooperatives, due to their ballooning debt.

“The poor payment performance of [the two cooperatives] has been a long-standing problem, stemming from both cooperatives’ financial mismanagement and low collection efficiency from consumers,” the DoF said.

Magelco has only paid P45.5 million out of its P147.2-million total power bill from December 2021 to April 2022. In addition, the firm still owes the government P3.8 billion. Lasureco has P12.9 billion in outstanding debts in power bills to PSALM as of April 30, and has not expressed intention to settle the debt, the Finance department said.

Magelco and Lasureco also have unremitted universal charges, which amount to P29 million and P9.5 million, respectively, which they have already collected from electricity consumers, it added.

PSALM has repeatedly demanded that the two entities pay their outstanding debts, with the threat of reducing their energy allocation if they continued to fail to settle their payments.

In late December last year, PSALM was instructed by the DoF to stop taking on additional liabilities from Magelco and Lasureco, also due to their payment delinquencies.

In April 2020, under Republic Act No. 11469 or the Bayanihan to Heal as One Act, PSALM increased the power allocations to the two cooperatives to ensure stable electricity in southern Mindanao during the height of the pandemic.

PSALM, a government-owned and controlled entity, was created by law to manage the orderly sale and privatization of the government’s power generation assets.

BusinessWorld reached out to the two electricity cooperatives for their side through the e-mail addresses listed in their social media accounts. They have yet to reply as of press time.— Tobias Jared Tomas