PSALM Invested $2.1 Million in Lehman Brothers

By CHARISSA M. LUCI

September 13, 2010, 7:49pm

MANILA, Philippines — The Power Sector Assets and Liabilities Management Corporation (PSALM) paid $2.1 million (approximately P98.7 million) for its $300-million “Principal-Only-Swap (POS) transaction with the bankrupt Lehman Brothers Corp., Eastern Samar Rep. Ben Evardone on Monday bared.

The transaction was confirmed by PSALM officer-in-charge Maria Luz Caminero during the recent hearing of the House Committee on Appropriations.

Evardone questioned why PSALM engaged in “very risky investments” when it was using the proceeds sourced out from the sale of the National Power Corporation (Napocor) assets, which “is not the mandate of PSALM.”

Because of this development, Evardone filed a resolution calling for an investigation on how the proceeds of the privatization were spent.

“I want to make sure that the consumers will not end up paying the huge Napocor debts because I think that the proceeds of privatization are enough to pay the liabilities of Napocor,” Evardone said.

Caminero defended the move, saying it was just part of the PSALM’s “liabilities management mandate.”

“I think the EPIRA Law is very clear that all proceeds from the sale of Napocor assets should be used to pay its debts so that the liabilities of Napocor will not be shouldered by the consumers by way of increases in electricity rates,” Evardone said.

Evardone is among the lawmakers who vowed to file a resolution to block the power rate increase as well to call for an investigation into the alleged abuses committed by the PSALM, a government-owned and-controlled corporation tasked to undertake the privatization of the assets of the Napocor.

The PSALM generated $10.65 billion from the privatization of Napocor assets. In 2009, it obtained $2.2 billion loans and another P30 billion loan in 2010. However, only a total of $4 billion was used to pay the debts of Napocor.