SMC, Aboitiz debt pre-payment eyed

Manila Standard Today
By Alena Mae S. Flores 

Power Sector Assets and Liabilities Management Corp. said Tuesday it is in talks with two of the biggest power companies to prepay their obligations to the government amounting to $3 billion.

“We’re in talks with Aboitiz and San Miguel for possible payment. San Miguel’s is roughly $2 billion while Aboitiz’s is around $1 billion. We’re exploring talks,” PSALM president Emmanuel Ledesma Jr. said at the sidelines of the Energy Department’s budget hearing.

Ledesma said the prepayment of the independent power producer administrator or IPPA receivables would help lessen the financial burden of the agency.

PSALM sealed $3.3 billion worth of deals from the privatization of the IPP contracts, but only around $495 million was collected. The remaining receivables were supposed to be collected over a certain period of time.

San Miguel won the bidding to manage the IPP contracts of the 1,000-megawatt Sual coal- fired power plant, 345-MW San Roque hydropower plant and the 1,200-MW Ilijan power plant. Aboitiz Power manages the contracts of the 700-MW Pagbilao coal plant.

PSALM said it was also negotiating with National Grid Corp. of the Philippines, operator of the power transmission network, for the prepayment of concession fees amounting up to $2 billion.

PSALM and National Grid expect to conclude the prepayment schedule within the year.

The range of the remaining outstanding concession fee is about $2.6 billion to be paid within 25 years but the government asked National Grid to pay in advance.

Ledesma earlier said there was “just one more issue” to be ironed out that would result in the conclusion of the prepayment agreement.

“I’d rather not discuss in detail, but there’s just one more issue,” he said.

The agency has a funding requirement of P60 billion this year, after taking into account the scheduled privatization payment and plants’ projected operations.

PSALM, however, was not able to privatize any power asset this year.   Its total debt and lease obligation to independent power producers reached P640 billion ($15.28 billion) as of end-September 2012.

The amount included P328 billion ($7.85 billion) in debts and P311 billion ($7.43 billion) in IPP lease obligations.   source