Sponsorship Speech

Senate Bill No. 1950 / Committee Report No. 426


August 23, 2018 at 3 o’clock in the afternoon

Session Hall, Senate of the Philippines


Delivered by HON. WIN GATCHALIAN, Senator of the Republic:


Mr. President, honorable peers in the Senate, a pleasant afternoon to you all.


When the electric power industry was restructured in 2001, the National Power Corporation or Napocor left 830.7 billion pesos worth of debt and independent power producers’ lease obligations.  These liabilities were transferred to and assumed by the Power Sector Assets and Liabilities Management Corporation or PSALM. PSALM was tasked to manage the sale and disposition of Napocor’s assets and liquidate its financial liabilities and independent power producer contracts. Power consumers were made to share the burden of paying for this indebtedness through the universal charge for stranded debts and stranded contract costs paid in the monthly electricity bill.


Since 2000, over 1.479 trillion pesos worth of PSALM’s financial obligations were paid from privatization proceeds, independent power producers contracts, and collections from power consumers through the universal charge.  Ibig sabihin, Mr. President, lahat tayo ay nagbabayad ng utang ng Napocor.  We have been paying 0.1938 pesos per kilowatt hour since January 2013, and 0.2203 pesos per kilowatt hour since June 2017, to pay for PSALM’s obligations through the universal charge for stranded debts and stranded contract costs. For a 200 kilowatt hour Filipino household, this means an expenditure of 38.76 to 44.06 pesos per month – the equivalent of about one kilogram of rice.


The universal charge is estimated to further increase in the coming years to pay off the remaining debt of 466.2 billion.  The cash flow projection of PSALM shows the necessity of collecting an accumulated universal charge of 0.5593 pesos per kilowatt hour from 2020 to 2026. This means a total additional charge of 111.86 pesos per month for an average household – money that could have been used to buy 2 to 3 additional kilos of rice.


Mr. President, the measure I am sponsoring today proposes to minimize, if not completely eliminate, the universal charges for stranded contract costs and stranded debts. If passed into law, this bill would lower electricity rates and provide significant consumer savings for Filipinos.   Allow me to explain how.


Senate Bill 1950 under Committee Report No. 426, also known as the Murang Kuryente Act, proposes to use the existing and future collections of the Malampaya Fund solely for the payment of the stranded contract costs and stranded debts.


As we know, the Malampaya Fund is the government’s net share from the net production proceeds from Service Contract 38, the Malampaya Natural Gas Project.  This fund, initially intended for exploration, development, and exploitation of energy resources, has remained largely unused since 2001.  Since 2001, the total remittance to the National Treasury for the Malampaya Fund has been 251 billion pesos, but only 17% has been released.  As it stands, the current balance of the Malampaya Fund is 207 billion pesos – an untapped resource that can be used to provide timely savings for Filipino power consumers, who have long endured some of the highest power rates in Asia.


The utilization of the Fund for the payment of Napocor’s debts is poised to provide significant savings to energy consumers across the country. Using 204 billion pesos, the total collection as of December 2017, would result in savings of 0.5467 pesos per kilowatt hours. For a household consuming 200 kilowatt hours per month, this would result in savings of 109.34 pesos per month, and 1312.08 pesos per year. The projected annual savings would be enough for a household to buy an extra sack of rice – A welcome relief for poor families burdened with the high price of this essential Filipino food staple at the moment.


However, this measure does not provide for a blanket utilization of the Fund. It also includes specific safeguards for its use.

First, PSALM is required to first apply collections from its different sources of revenue before it can tap the Fund.

Second, the amounts used from the Fund for the payment of debt shall be allocated through the General Appropriations Act.

Third and last, once the obligations have been fully paid, the Malampaya Fund will accrue back to the Special Fund used to finance energy resource exploration, development, and exploitation programs.


The bill also has a key transparency feature. It requires PSALM’s annual projected and actual cash flow statements, including its payment schedule, to be submitted to the Department of Energy, Energy Regulatory Commission, Department of Finance, Department of Budget and Management, and the Joint Congressional Power Commission. These documents shall be made available to the public through the PSALM website.


Before ending, allow me to recognize our esteemed Senate President Pro Tempore, Senator Ralph Recto, who authored the original bill as filed and who, from the start, has advocated the use of the Malampaya Fund to reduce electricity rates.


All in all, Mr. President, it is high time for the Filipino people to receive tangible benefits from the Malampaya Fund.  With the approval of this measure, the government profits realized from Malampaya Natural Gas Project will end up producing more affordable retail power rates for millions of consumers across the country.  With this in mind, I hope for the immediate passage of this measure.


Thank you, Mr. President.