PSALM goes back to DOE on Malaya privatization

Published January 27, 2018, 10:01 PM By Myrna M. Velasco

https://business.mb.com.ph/2018/01/27/psalm-goes-back-to-doe-on-malaya-privatization/

State-run Power Sector Assets and Liabilities Management Corporation (PSALM) will need to revert to the Department of Energy (DOE) on any definitive plans that shall be integrated into the privatization package of the 650-megawatt Malaya thermal power plant.

PSALM Officer-in-Charge Arnold C. Francisco said “we still have to discuss with DOE with regard to the privatization structure.”

He added the company is hopeful that “we get direction within the first quarter of this year.”

The Malaya plant’s divestment had been among those set on cliffhanger, because of the energy department’s inclination to have the facility’s fuel technology be shifted to natural gas.

It had been lined up in the auction block last year, only to be aborted later on because the DOE had one thing in mind as to its preferred privatization mode for the asset.

PSALM emphasized that it has yet “to receive final word from the DOE on the natural gas policy which will be included in the plant’s sale terms of reference.”

Aside from the Malaya plant’s divestment this year, PSALM is also eyeing to advance the privatization of the supply contract of the 210MW Mindanao coal-fired power facility.

These two are the asset-privatizations lined up by the company so it can shore up profitability and for it to pare its swelling financial obligations.

“PSALM will seek its Board’s definitive policy on the privatization of Malaya thermal power plant and Mindanao coal-fired power plant,” the state-run firm has recently indicated.

For the Mindanao coal plant, previous proposals hinged on prospective buy-out of its supply contract, after which, PSALM will have to pursue the asset’s direct sale.

It was added that PSALM “may further await an appropriate time to offer the plant on the sale block.”

The company stressed that since Mindanao grid is now on oversupply mode, “the plant may not attract maximum investment.”

Despite some stumbling blocks, PSALM asserted that it “is bent on achieving its privatization targets this year, particularly the sale of its expensive plants to cut on operational costs and to augment funds for paying-off its assumed obligations that will significantly benefit the government and the electricity end-users.”

With additional proceeds from sale of assets, PSALM will have greater wherewithal to pay off debts – that in turn, could bring down its debt level and will ultimately reduce its pass-on of universal charges to consumers.

Other assets on the company’s privatization queue are 231 lots forming part of its real estate privatization program; as well as the Manila thermal and Bauang diesel plants.