PSALM registers P26-billion forex losses due to weak peso

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

State-run Power Sector Assets and Liabilities Management Corporation (PSALM) registered swelling foreign exchange (forex) losses of roughly P26 billion in the first six months of this year due to the precipitous slide in the value of the Philippine peso versus the greenback.

“With the depreciation of the Philippine peso to the US dollar to P53.5220 from P49.923 (at the end of 2017), the impact to PSALM is an additional obligation or a forex loss of about P25.69 billion for the first half of 2018,” PSALM President Irene Joy B. Garcia has divulged.

Garcia emphasized that such accounted for its foreign-denominated debts as well as outstanding lease obligations under its contracts with independent power producers (IPPs) – part of the assets and liabilities transferred to it by the National Power Corporation.

If reckoned from just January to June this year, the PSALM executive noted that the company’s total financial obligations had been at P464.42 billion.

And with the Philippine peso depreciating further to the level of P54.2320 versus the US dollar in recent weeks, Garcia emphasized that such translated to an “equivalent additional forex loss of P4.22 billion.”

That then pulled up the company’s total obligations to P468.64 billion to-date, it had gone even higher from the P466 billion estimate as of end-December 2017 – essentially eclipsing the recent debt payments made by the company.

The PSALM president noted that its financial obligations are dominated by US dollars – around 74 percent of the total; and Japanese yen had 6.0-percent share in the pie. The balance of the firm’s debts had been in the local currency.

PSALM has been exploring various measures so it can shore up cash flow – strategies of which include escalated privatization of remaining government-owned power assets and going after past due accounts.

By end of last year, the state-run firm’s magnitude of liabilities had been at US$5.27 billion for long-term debts; and US$4.03 billion on IPP lease deals.

As part of its liability management scheme, PSALM has been calculating steps on how it can continually divest the remaining NPC properties – including real estate assets.

It has been the wish of PSALM Board Chairman and Finance Secretary Carlos G. Dominguez III that the liabilities of the power sector be wiped out completely at the of PSALM’s corporate life in 2026, but at the rate of recent developments, this appears to be an elusive goal.