THE Power Sector Assets and Liabilities Management Corp. (Psalm) intends to secure a P43-billion loan from the Development Bank of the Philippines (DBP) to pay for its maturing obligations this year.
“This loan will be needed because, while Psalm anticipates revenues coming from privatization proceeds, power sales, delinquent and overdue accounts collections, and UC [Universal Charge] stranded debts proceeds, these revenues will not be sufficient to cover all the maturing obligations and operating expenses (opex) for the rest of 2020,” the state firm said last Thursday.
Psalm has about P51.47 billion maturing debts and P23.95 billion of Independent Power Producers (IPP) lease obligations for the rest of this year. Also, the government-owned and controlled corporation needs about P3.42 billion in opex for the rest of the year.
The company said it has already obtained the approval of the Department of Finance to implement the first drawdown from the said loan by June.
As of May 14, Psalm’s debts reached P404.28 billion. It reduced its financial obligations by P17.7 billion from P422.01 at the start of the year.
Psalm said it had sufficient funds to pay all its maturing obligations in the first five months of the year, even those that fell due during the enhanced community quarantine (ECQ).
Psalm’s liquidity was mainly because of its efficient performance in 2019 and in the early months of 2020, and notwithstanding the deferment of substantial revenue collections during the ECQ as ordered by the Energy Regulatory Commission and the Department of Energy on Covid-19.
According to Psalm, it has been paying its maturing debts and IPP obligations, including interest and other charges, despite the ECQ and the deferment of revenue collections from power bills, certain IPPA payments and the Universal Charge.
“There are certainly serious financial setbacks caused by Covid-19 and the ECQ, but Psalm will not default on any of its maturing obligations,” Psalm President and CEO Irene Joy Besido-Garcia said.
Psalm is the entity created by the Electric Power Industry Reform Act (Epira), the law that restructured the power industry by privatizing the assets of the National Power Corp. (NPC).
Funds in settling Psalm’s assumed financial obligations are sourced from collections from its power generation, privatization proceeds, and universal charge.
In May last year, Psalm secured a $1.1-billion syndicated loan from the following: Mizuho Bank Ltd. ($300 million); MUFG Bank Ltd. ($300 million); Sumitomo Mitsui Bank Corp. ($300 million); DBP ($100 million); and, Land Bank of the Philippines ($100 million).
Besido-Garcia said the loan has a term of five years and one-day amortization, with interest benchmark of three months US Libor +70 bps.
Two years ago, Psalm borrowed about P23 billion to cover its maturing obligations.
