THE Philippine Independent Power Producers Association Inc. (PIPPA) appealed for flexibility in payment to their suppliers and creditors as well as changes in the market rules to help them cope with the effects of the new coronavirus disease 2019 pandemic.
Anne Estorco-Montelibano, PIPPA executive director, said in a virtual Joint Congressional Energy Commission hearing on Friday members have complied with the directives of the Energy Regulatory Commission (ERC) and the Department of Energy (DOE) to extend the payment of power generators and distributors in four installments but they themselves need flexibility.
PIPPA said prolonging the implementation of payment flexibilities will take a toll on their operations and may lead to closure of some power plants and the deferment of investments.
Montelibano said since the imposition of the enhanced community quarantine, all PIPPA members have adapted and adjusted payment of their customers in four-month installments mandated by the ERC and the DOE even if this has affected the sustainability of their own operations.
“While we extend that liberality to our counterparties, we have experienced difficulty in our own suppliers and creditors where some, naturally affected by the pandemic, are unwilling to extend payment flexibilities. There was no pause on the generation companies’ fixed costs in the form of debts, bank loans, insurance, labor, maintenance, fuel, taxes and the like,” Montelibano expressed.
She said a similar flexibility in their own financial agreements and suppliers and possible amendments in the market rules would help ease the burden they experienced during the ECQ and would help them adjust to the new normal.
Montelibano said PIPPA members will honor contracts with generators and distribution utilities but since the impact of the quarantine differs per area, such contracts may be adjusted.
She said for one, payment adjustments should only for targeted customers.
“Now more than ever, is not the time for short-term solutions that may have disastrous long-term consequences. As generators, we have always maintained that instead of knee-jerk reactions, the industry should come together and support a holistic approach to this novel problem since we foresee that until the pandemic is under control, recovery will take a long time and everyone’s cooperation is needed,” Montelibano said.
Earlier, power generators like San Miguel Global Power Corp. said market rule adjustments will allow them to temporarily limit their production while demand is low. This will help not just for trimming losses but also for saving fuel.
In the same briefing, consumer group Laban Konsyumer Inc. (LKI) said PIPPA’s plea can push the Philippine Competition Commission to conduct an inquiry for possible anti-competitive behavior.
“Thrusting the national government into claims of possible defaults to loans of foreign lenders to the industry, is a threat, ungentlemanly and flexing of muscle amidst a pandemic,” said Vic Dimagiba, LKI president.
