NGCP, Psalm Reconcile Concession Fees

Manila Bulletin
March 19, 2012, 2:59am


MANILA, Philippines — Concessionaire National Grid Corporation of the Philippines (NGCP) is currently reconciling with the Power Sector Assets and Liabilities Management Corporation (PSALM) the various cost components that must be factored into the final concession fees in case an agreement on prepayment would be arrived at by the parties.


“There are numbers we are reviewing and reconciling with PSALM – such as the PUCs (projects under construction) and even the sale of the subtransmission assets,” NGCP senior adviser to the president Joseph Ferdinand Dechavez said in an interview.


Schedule 6 of the Concession Agreement in particular prescribes that adjustments in the concession fees shall be made in regard to the sale of the sub-transmission assets.


Dechavez explained that the numbers to be drawn from the specified items will be necessary for both parties to determine the final concession fee that shall be settled in the prepayment bid of PSALM.


“The question is: what would be our talking points in the prepayment? So, these will have to be computed because they will have to be integrated in the computation of the concession fees – it would either be a reduction or increase in the concession fees. That way, we would be able to determine how much we’re going to settle,” he stressed.


PSALM previously noted that with its bid for prepayment of the NGCP concession fees, it would be able to pare its liabilities and ease the pass-on cost of its universal charges to the consumers. The company’s preliminary expectation would be a prepayment for $5.87 billion worth of receivables and interests from the transmission concessionaire’s concession fees.


“We are having meetings with PSALM. The final number in the concession could go up or down, and we are prepared. What we are just saying is, we need the figure. For us, it is a matter of looking at how we would be able to help the government,” Dechavez has emphasized.


PSALM president Emmanuel R. Ledesma Jr. noted that his company has been “evaluating all relevant factors to arrive at the most advantageous terms for the advance payment or sale of the receivables from NGCP.”


By doing this, he emphasized that this “will allow PSALM to meet it cash flow requirements and avoid incurring additional loans for payment of maturing obligations. Any transaction that PSALM will undertake in connection to the prepayment will be advantageous to the government.”


The principal amount of the concession fee had been placed at $3.95 billion – which was the winning bid of NGCP. The concession deal provides that the upfront payment of the concessionaire at the transaction’s closing date shall be equivalent to 20% of its bid; and the balance shall be paid in semi-annual installments over 20 years.