PSALM sends final demand letter to Olongapo LGU for payment of P6.713-B unpaid electricity bills

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The Power Sector Assets and Liabilities Management Corp. (PSALM) has sent a final demand letter to the Olongapo City Government to pay its long overdue obligations of at least P6.713 billion in electricity bills and other charges over a 12-year period.

In the final demand letter sent by PSALM President-CEO Irene Besido Garcia and acting Vice President for Finance Manuel Marcos Villalon II, Olongapo City was given 7 calendar days from receipt of the demand letter to pay its arrears or face legal action.

PSALM addressed its formal and final demand letter to Olongapo City Mayor Rolen Paulino for obligations of the city’s Public Utilities Department amounting to P6.713 billion as of July 31, 2020, covering a period of over 12 years.

Garcia and Villalon told Paulino that PSALM will be constrained “to avail of all appropriate legal remedies to protect PSALM and the Government’s interests, including the filing of criminal, civil and administrative cases” against him and other local government officials of the city, if the Olongapo City government fails to pay the “demanded overdue amount within the prescribed period.”

Copies of the final demand letter were furnished Finance Secretary and PSALM chairman Carlos Dominguez III, Energy Secretary Alfonso Cusi and DILG Secretary Eduardo Año.

In its letter to Paulino, PSALM said the local government unit (LGU) incurred the following long-due obligations: 1) power bills with interest and value-added tax (VAT) amounting to P5.66 billion; 2) Default Wholesale Supplier Arrangement (DWSA) charges with interest and VAT, P813.77 million; 3) Deferred Accounting Adjustment (DAA) charges with interest and VAT, P230.71 million; and 4) VAT on the Automatic Cost Recovery Mechanism True Up (ACRM), P8.72 million.

PSALM first sent a final demand letter to the City Government in May 2019, with the arrears then amounting to P6.18 billion, which remain unpaid for over 9 years. The LGU responded by remitting P20 million in July and December last year, leaving a still substantial amount of arrears unpaid.

Thus, as of July this year, the City Government’s arrears have ballooned to P6.713 billion and will continue to increase if it remains unpaid, PSALM said.

PSALM documents show that it sent its first of a series of final demand letters to the Olongapo City Government in April 2012, when the LGU’s arrears amounted to only P3.58 billion.

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