DBP credit facility offered to electric coops to stretch loan payments

By Myrna M. Velasco – October 24, 2018, 10:00 PM
from Manila Bulletin

State-run Power Sector Assets and Liabilities Management Corporation (PSALM) is dangling a payment arrangement on the debts of electric cooperatives (ECs) that shall be tied to a loan facility that could be extended by the Development Bank of the Philippines (DBP).

PSALM President

Irene Joy B. Garcia

PSALM President Irene Joy B. Garcia said the company had coordinated with DBP – for the concerned ECs to access a credit window with up to 20-year maturity; and will use such to pay their outstanding debts with PSALM.

“The way we did it is: We coordinated with DBP, they (ECs) would borrow form DBP. Then DBP will pay us directly, at least they can still stretch their payment terms,” she said.

Garcia noted that in their discussions with the ECs, most of them have been batting for payment duration up to 20 years, “but we cannot do that because our corporate life will just be good for eight years from now.”

At this stage, she disclosed that three ECs had already firmed up deals with PSALM on how they shall be settling their outstanding financial obligations. In particular, Sorsogon Electric Cooperative II (SORECO II), she said, agreed to restructure its receivables with PSALM; while SORECO I and Camarines Sur Electric Cooperative II (CASURECO II) entered into special payment arrangements (SPAs) with the company and these had already been referred to the PSALM Board for approval.

“The advantage of this is: they are open to paying – because if we just have these receivables in our books, then we should be foregoing prospective income,” Garcia explained.

She further narrated “one of the things that I have done when I came into office was really to review all the receivables – the unpaid loans of a lot of the electric cooperatives.”

Garcia intimated the magnitude of these receivables could run up to billions of pesos, with her stressing that “the list is very long.” Back in 2013, PSALM’s aggregate EC receivables had been estimated reaching P11 billion to P12 billion.

“We reached out to them (ECs) to try to come up with feasible payment arrangement,” the PSALM chief executive has emphasized.

Beyond the three power utilities that already concurred on payment terms, Garcia indicated that they are negotiating with several other ECs – with her expressing confidence that they will likely clinch favorable arrangements with these ECs soon.

“We should be able to encourage them to continue paying by entering into agreements… they have to restructure their loans. If we can sit down and discuss on viable payment terms, then the payments will start coming in again,” she said.