PSALM pares power sector debts by ₱27 B

Published May 12, 2020, 10:00 PM By Myrna M. Velasco
https://business.mb.com.ph/2020/05/12/psalm-pares-power-sector-debts-by-%e2%82%b127-b/

State-run Power Sector Assets and Liabilities Management Corporation (PSALM) was able to trim power sector debts by ₱27 billion last year to ₱422.01 billion as of end-December compared to ₱449.2 billion full-year in 2018.

Of the total remaining power obligations, ₱273.38 billion comprised of debts; while ₱148.62 billion accounted for lease obligations with the contracted independent power producers (IPPs) of privatized National Power Corporation.

Since the passage of the Electric Power Industry Reform Act (EPIRA) and the divestment of the government-owned power assets, it was PSALM that duly assumed the financial obligations of NPC and was also vested with the mandate to repay such liabilities.

“In terms of currency, more than half or 68-percent of PSALM’s financial obligations are denominated in US dollars – amounting to ₱286.98 billion,” the state-owned company said.

It added that peso-denominated financial liabilities still hover at ₱106.47 billion or 25.2-percent; while the remaining obligations of ₱28.57 billion or 6.8-percent are in Japanese yen.

As reckoned from last year’s calculation of the outstanding debts, PSALM indicated that the foreign exchange rates employed were: ₱50.7440 to the US dollar; and ₱0.4629 per Japanese yen – and these have been based on the guiding rates of the Bangko Sentral ng Pilipinas.

The intent of the EPIRA law was to utilize the proceeds from the privatization of the power assets to retire NPC-PSALM debts, but even after the sale of most of the generating facilities and power transmission assets of the government, the residual financial obligations were still mounting.

PSALM has been targeting to continually privatize the remaining power assets, but given the drawbacks posed by the lockdowns because of the coronavirus pandemic, the challenges may come even tougher in the coming months or even up to next year.

The company is lining up the sale of the 650-megawatt Malaya thermal power facility this year, but that process is now getting snagged by the extensions of the enhanced community quarantine (ECQ) and compounded by the very low price offers previously tendered for the asset.

PSALM is also lining up the divestment of several real estate assets, and that is anticipated to go on until the end of corporate life of the state-run firm in 2026.

As targeted, any unsettled debts or financial obligations and even unsold assets at the end of PSALM’s life cycle will have to be turned over to the national government.