By Myrna M. Velasco
Published: August 19, 2013
Ledesma Jr.
Transmission firm concessionaire National Grid Corporation of the Philippines (NGCP) has already remitted $1.0 billion prepayment on its concession fees, adhering to a request that was made by the Power Sector Assets and Liabilities Management Corporation, government officials confirmed.
At that level of prepayment, PSALM president Emmanuel R. Ledesma Jr. noted that the grid operator’s concession fees will already be covered for 8.5 years. That will also make NGCP’s remaining balance trimmed down to $1.7 billion.
Ledesma illustrated that if the prepayment could have reached the higher requested amount of $2.0 billion, the coverage period will be for 13 years; and will render the balance at $700 million.
In an announcement made to the media, NGCP president Henry T. Sy Jr. qualified that it was PSALM which made a formal request on the prepayment, and that they heeded it to help the government-run energy firm on its fiscal dilemmas.
However, as of press time, a receipt has not been issued to NGCP yet reportedly due to issues raised by the transmission firm owner National Transmission Corporation (TransCo) as to the prepayment scheme entered into by PSALM. TransCo sent a letter to PSALM formally seeking an explanation on this transaction.
Based on documents culled, NGCP’s concession fee remittances amount to P13 billion annually, hence, TransCo is repulsive at prospects that the government may have been shortchanged on the prepayment deal. The 20-year financing deal set for concession-underpinned TransCo privatization carries an interest rate of 8.5-percent plus some adjustments.
It has been explained that at 8.5-year duration, the government could fetch as much as P110.5-billion total concession fees but the prepayment of $1.0 billion may only amount to P43.66 billion (at current peso-dollar exchange rate). However, if the fixed foreign exchange rate of P42.75 to the US dollar, as prescribed by a “schedule” of the Concession Agreement will be applied, that will only amount to P42.75 billion.
Under 6.07 prepayment provision of the Concession Agreement, it was stipulated that “so long that there is no amount due to PSALM or TransCo under this Agreement (including deferred payments) and other Transaction Documents that are in arrears, the Concessionaire shall have the option to prepay any deferred payment or any portion thereof, including the right to determine which Deferred Payment or portion thereof is being prepaid.”
Officials concerned, however, came on record that “there are still amounts due to PSALM which NGCP does not agree to which run into hundreds of millions. These should have been the amounts settled first,” stressing further that “NGCP has to settle its payables to PSALM before it can opt for prepayment.”
There was the same claim from government’s end that “NGCP did not actually opt for prepayment. It was requested by PSALM to prepay.”
Aside from NGCP, PSALM is also seeking prepayment arrangements with the independent power producer administrators (IPPAs) of the privatized power supply contracts. source
At that level of prepayment, PSALM president Emmanuel R. Ledesma Jr. noted that the grid operator’s concession fees will already be covered for 8.5 years. That will also make NGCP’s remaining balance trimmed down to $1.7 billion.
Ledesma illustrated that if the prepayment could have reached the higher requested amount of $2.0 billion, the coverage period will be for 13 years; and will render the balance at $700 million.
In an announcement made to the media, NGCP president Henry T. Sy Jr. qualified that it was PSALM which made a formal request on the prepayment, and that they heeded it to help the government-run energy firm on its fiscal dilemmas.
However, as of press time, a receipt has not been issued to NGCP yet reportedly due to issues raised by the transmission firm owner National Transmission Corporation (TransCo) as to the prepayment scheme entered into by PSALM. TransCo sent a letter to PSALM formally seeking an explanation on this transaction.
Based on documents culled, NGCP’s concession fee remittances amount to P13 billion annually, hence, TransCo is repulsive at prospects that the government may have been shortchanged on the prepayment deal. The 20-year financing deal set for concession-underpinned TransCo privatization carries an interest rate of 8.5-percent plus some adjustments.
It has been explained that at 8.5-year duration, the government could fetch as much as P110.5-billion total concession fees but the prepayment of $1.0 billion may only amount to P43.66 billion (at current peso-dollar exchange rate). However, if the fixed foreign exchange rate of P42.75 to the US dollar, as prescribed by a “schedule” of the Concession Agreement will be applied, that will only amount to P42.75 billion.
Under 6.07 prepayment provision of the Concession Agreement, it was stipulated that “so long that there is no amount due to PSALM or TransCo under this Agreement (including deferred payments) and other Transaction Documents that are in arrears, the Concessionaire shall have the option to prepay any deferred payment or any portion thereof, including the right to determine which Deferred Payment or portion thereof is being prepaid.”
Officials concerned, however, came on record that “there are still amounts due to PSALM which NGCP does not agree to which run into hundreds of millions. These should have been the amounts settled first,” stressing further that “NGCP has to settle its payables to PSALM before it can opt for prepayment.”
There was the same claim from government’s end that “NGCP did not actually opt for prepayment. It was requested by PSALM to prepay.”
Aside from NGCP, PSALM is also seeking prepayment arrangements with the independent power producer administrators (IPPAs) of the privatized power supply contracts. source
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