Published July 25, 2017, 10:00 PM By Myrna M. Velasco
Being its main supervising agency, the Department of Finance (DoF) has already given go-signal on P15 billion worth of borrowings for Power Sector Assets and Liabilities Management Corporation (PSALM), just enough to pay off maturing debts.
PSALM Officer-in-Charge Lourdes S. Alzona indicated that their proposal was actually for P30-billion loan which also secured prior approval of the company’s board.
But she qualified that the finance department only “cleared the amount of P15 billion in order for PSALM to just service debt maturities this first semester.”
Finance Secretary Carlos Dominguez III who sits as chairman of the PSALM Board told media about the state-owned company’s dire need to resort to fresh round of borrowings because of the snarled approval on its application for universal charges (UCs) – all set for collection as pass-on charges in the consumers’ electric bills.
PSALM has been painstakingly waiting for the approval of its UC petitions on cost recoveries for stranded debts and stranded contract costs, but delayed regulatory actions tend to stifle targets of getting the state-run firm at least financially afloat to meet obligations falling due.
Alzona hinted that if the UC pass-on may still not be decided this year, the company’s last option would be another round of loan procurement.
“Additional borrowing may be resorted to if these other receipts (prospective UC collections) do not materialize,” she said.
Alzona added that “while PSALM is focusing continuously on collection of receivables, it is looking on its pending rate recovery applications with the regulatory body as PSALM’s other source for the 2017 funding requirement.”
The state-run firm has close to P100 billion worth of UC recoveries that could substantially shore up its financial capacity to settle maturing obligations. However, regulatory gridlocks on its applications to recoup warranted costs are way beyond its control.
UC for stranded debts account for costs that cannot be recovered from the privatization proceeds of the divested National Power Corporation (NPC) assets; while those on UC stranded contract costs represent the portion of the contract costs with the independent power producers (IPPs) that cannot be recouped with the restructuring of markets.