Extended payment schemes shackle power generators

The Philippine Independent Power Producers Association Inc. (PIPPA) warned of closure or non-investment in the generating sector if payment schemes are further extended beyond the enhanced community quarantine.

PIPPA said its members have complied with the extension of payment to their clients as ordered by power regulators.

“We are complying with the extension of payment and the four-month installment mandated by the Energy Regulatory Commission (ERC) and the Department of Energy (DOE),” PIPPA president and executive director Anne Montelibano said during the Joint Congressional Energy Commission (JCEC) hearing on Friday.

However, the sector itself has found challenges in getting flexible payment schemes from its creditors and suppliers. These are under generation companies’ fixed costs in the form of debts, bank loans, insurance, labor, maintenance, fuel, taxes, etc.

“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,” Montelibano said.

“Despite this, our generators adapted and continue to make ends meet in compliance, support, and solidarity with the industry. In the long run however, extended payment flexibilities will take a toll on their operations, otherwise the alternative may be to close shop or to cease investing in new power plants,” she said.

The group is seeking the help of JCEC for some flexibility in its financial agreements with suppliers and creditors.

But while this has yet to be addressed, PIPPA is ensuring its members will continue to comply with regulations and to provide electricity.

“We would like to assure the commission however, that our generators have been pursuing all available and alternative options to ensure uninterrupted service,” Montelibano said.