Published January 8, 2017, 10:00 PM by Myrna M. Velasco
Applying proceeds from divestment of assets, state-run Power Sector Assets and Liabilities Management Corporation (PSALM) has effectively trimmed down power sector debts and liabilities to P538 billion as of last year from the monstrous pre-privatization level of P1.241 trillion, according to data from the company.
The firm noted that prior to privatization, or around year 2003, the power sector’s long-term debts and financial obligations under build-operate-transfer (BOT) contracts had been massive, but that had already been reduced by P702.6 billion as of mid-2016.
Currently though, PSALM is worried about the significant bearing “of the changes in foreign exchange rates,” given that chunk of its credit facilities are denominated in foreign currencies, primarily in US dollars.
“This makes the company very vulnerable to varying exchange rates,” it stressed.
The breakdown of remaining debts as of last year had been as follows: P158.02 billion or 51.50-percent are in US dollars; P28.16 billion or 9.18-percent in Japanese yen; and P120.64 billion or 39.32-percent are Philippine peso-denominated debt accounts.
At the passage of the Electric Power Industry Reform Act (EPIRA) in 2001, the power sector’s outstanding financial obligations had been at P830.7 billion — comprising of P319.1 billion (or $6.1 billion) long-term debts; and P511.6 billion (or 10.4 billion) BOT lease obligations.
The amount swelled further due to some additional indebtedness incurred to fund debt payments as well as capital outlay for National Power Corporation (NPC) assets that were being delayed on the divestment block.
That was compounded by its assumption of obligations from the debts write-off of the electric cooperatives. And at the time that PSALM formally assumed NPC’s debts and liabilities in 2008 via an Operation and Maintenance Agreement (OMA), total obligations had still been at a whopping P904.8 billion.
Nevertheless, the company emphasized that “with the privatization of some of its IPP plants, (it) saw a collective reduction in its losses by foregoing the corresponding costs of operating these plants that were more than their generated incomes.”