By
Lenie Lectura- June
18, 2019
The Power Sector Assets
and Liabilities Management Corp. (PSALM) has drawn $1.1-billion
syndicated loan from five banks.
The loan would be utilized
to settle maturing debts of the National Power Corp. (NPC).
Under the Electric
Power Industry Reform Act (Epira), PSALM is the government agency tasked to
repay the debts of the NPC.
“For the
$1.1-billion syndicated loan, there are five participating banks—Mizuho Bank
Ltd., $300 million, MUFG Bank Ltd., $300 million, Sumitomo Mitsui
Bank Corp. $300 million, Development Bank of the Philippines, $100 million and
Land Bank of the Philippines, $100 million,” said PSALM President and Chief
Executive Officer Irene Joy Garcia in a text message.
The loan, said the
PSALM official, has a term of five years and one-day amortization, with
interest benchmark of three months US libor + 70 bps.
“After we secured
all the required approvals and clearances, we proceeded with the execution of
the syndicated loan on March 28, 2019. Thereafter, all the conditions precedent
and deliverables for drawdown were completed last week so the drawdown happened
on May 16, 2019,” Garcia said.
The PSALM offical said
earlier that the agency is constrained to resort to borrowings under national
government guarantees in order for PSALM to timely fulfill its mandate of
liquidating the financial obligations of the NPC.
In 2018, PSALM borrowed
about P23 billion to cover its maturing obligations.
Funds in settling
PSALM’s assumed financial obligations are sourced from collections from its
power generation, privatization proceeds and universal charge.
PSALM earlier reported
that independent power producer administrators (Ippas) and electric
cooperatives (ECs) dominate the list of the top corporate entities with long
overdue accounts with the agency amounting to a combined P59.23 billion as of
December 2018. A number of these accounts were transferred by the NPC
to PSALM.
“As a result, PSALM had
to pay interest, guarantee fees and other finance charges of about P2.62
billion per year. Had the Ippas and electric cooperatives paid, PSALM would not
incur this much additional costs,” the agency had said.
PSALM has trimmed down
its financial liabilities by P78 billion in 2018. It settled a total of P78.66
billion for maturing obligations broken down into P31.50 billion debts, P29.07
billion in IPP lease obligations and P18.08 billion in interest and other
charges.
After the
settlement, PSALM’s outstanding balance stood at P449.94 billion as of
end-2018.
The state firm also
recorded P25 billion in foreign-exchange losses. “With peso depreciation
in 2018 versus end of 2017, total forex impact is around P25 billion,” said
PSALM.
The state firm
explained that for every P1 devaluation to the US dollar, there’s an P8-billion
increase in PSALM’s financial obligations, and accordingly, forex loss
incurred.
The bulk of PSALM’s
financial obligations are foreign denominated, with a huge portion based in US
dollars. Any devaluation of the peso against the US dollar from time to time
contributes to the surge in financial obligations. The commissioning of new
power plants at that time also led to the spike in the debts’ interests.
It is projected that
with PSALM’s continuous privatization efforts, including the sale of
real-estate assets, collection of universal charge and power-generation
proceeds, and financial obligations will further decrease substantially when
the corporate life of PSALM ends in 2026.
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