What’s happening in Pantabangan?

While most of Central Luzon was suffering from the floods, the townsfolk of Pantabangan, Nueva Ecija, have been suffering from another calamity: no electricity. Since July 23, the people here have been in the dark, both literally and figuratively. No, it’s not because of the floods. The reason is not a natural disaster but a manmade one. They have no light because their power supply has been cut off by the power supplier. And they don’t understand why. Although they have been religiously paying their electric bills to the municipal government, which owns and operates the power distributor, their power supply was still cut off.

It turned out that the distributor, the Pantabangan Municipal Electric Services (Pames) has not been paying the power supplier, First Gen Hydro Power Corp. (FGHPC) although the former has been regularly collecting the payments of the customers for their electric consumption. The municipal government now owes FGHPC a total of  P80 million, incurred since December 2008.

Aside from its overdue accounts to FGHPC, sources say, Pames also has an outstanding debt to the Power Sector Assets and Liabilities Management Corp. (PSALM) in the amount of P26.3 million as of Dec. 31, 2011.

The last straw for FGHPC was the failure of Pames to make the scheduled payment of

P7 million due last June 30, 2012, despite the reasonable extension granted upon the municipality’s request.

Earlier, FGHPC, after numerous attempts since 2008 to collect from Pames failed, sent the latter a final notice of disconnection last Feb. 8, 2012. FGHPC held off after Pantabangan Mayor Romeo Borja Sr. appealed for an extension, which led the parties to enter into a restructuring agreement last March 16, 2012. The agreement clearly stipulated a schedule of payment. So what did the mayor do? Nothing.

That is why FGHPC had no choice but to finally cut off power to the town to ensure the viability of the Pantabangan-Masiway Hydroelectric Complex, which the power supplier owns and operates and which, in addition to Pantabangan, also supplies electricity to seven other entities consisting of four electric cooperatives, one private distribution facility, two government customers, and an industrial customer.

Is the Pantabangan municipal government cash-strapped like so many other local government units in the country? Apparently not. What happened and is still happening in Pantabangan is a case of fund mismanagement, with the management playing fast and loose with the people’s money.

Look at this: A 2010 audit report by the Commission on Audit (COA) said that the municipal government spent P51.2 million to hire job order employees, which the COA report branded as “unnecessary, irregular and unconscionable.” Among other things, the amount spent to hire the job order employees is almost one-third of the P166 million income of the municipal government for the same year.

The COA also discovered that the municipal administration misapplied unremitted trust liabilities, causing a cash overdraft of P57.5 million in 2009 and P80 million in 2010; unauthorized cash advances over a two-year period totaling almost P30 million, with some P17 million remaining unliquidated by the end of 2010.

It gets even worse. The COA also cited other violations, to wit: nonsubmission of copies of contracts, together with the supporting documents, to the COA within the prescribed period, which prevented the timely review and evaluation of the same; nonsubmission of vouchers requiring pre-audit before payment; nonrelease of shares on real property taxes of barangays and the provincial government amounting to almost P32 million in 2009, and P40 million in 2010; delay in the remittance of withholding taxes to the Bureau of Internal Revenue, leaving an unremitted balance of almost P30 million in 2009 and P26.3 million in 2010; failure to conduct the required annual physical inventory of Property, Plant and Equipment in 2009, rendering doubtful the validity and accuracy of the accounting records; and, finally, nonremittance of compulsory contributions made by municipal employees to the Government Service Insurance System, Pag-Ibig and PhilHealth, depriving them of benefits.

There is money going into the municipal treasury, but where it goes after that and how it is spent, only the mayor and his vice mayor-son know. What is clear is that the funds raised by the municipal government do not go to where they should go. It is therefore not surprising that the municipal government cannot pay its debts to FGHPC.

In spite of the fact that the municipal government has huge liabilities amounting to a whopping P365 million as of 2010, more than double its income of P166 million for the same year, the mayor insists on borrowing P600 million from banks, particularly the Development Bank of the Philippines and the Philippine National Bank from which it still has unpaid  loans. The additional P600 million it wants to borrow is supposed to finance projects that it cannot even justify and apparently do not have clear feasibility studies. It has not even accounted for how the funds from the previous loans were spent.

The mayor is already facing charges before the Ombudsman for his refusal to provide details on the above mentioned loan application, a possible violation of Republic Act 6713 (the Code of Conduct and Ethical Standards for Public Officers and Employees) and RA 9485 (the Anti-Red Tape Act of 2007).