PSALM to trim debts by ₱23 B this year

By Myrna M. Velasco – September 16, 2021, 2:48 PM
from Manila Bulletin

State-run Power Sector Assets and Liabilities Management Corporation (PSALM) indicated that it would be able to trim down outstanding financial obligations by P23 billion this year on continued flow of proceeds from the sale of National Power Corporation’s (NPC) assets.

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“At the start of the year, we were down to P381.72 billion. Our target for this year is to reduce it by another P23 billion – net of all the interests and borrowing costs,” PSALM President Irene Besido-Garcia told reporters.

By end December this year, she emphasized that the debt level of PSALM will likely be reduced to P358 billion. PSALM stood as NPC’s successor-company that assumed all of its liabilities. It was also decreed by law to privatize these power assets.

Garcia said to reinforce the flow of privatization proceeds into PSALM’s coffers, the company will carry on with its mandate of divesting the remaining NPC power plants as well as real estate assets that had been transferred into its charge.

The latest big-ticket privatization achievement of PSALM was the sale of the 650-megawatt Malaya thermal power plant – and in that facility divestment, the government fetched P4.85 billion worth of proceeds, inclusive of the plant’s fuel inventory.

“The privatization of the Malaya thermal power plant will greatly help PSALM in reaching the target,” the PSALM chief executive noted, adding that with the lowering of the power sector’s liabilities, that will “ultimately help the Filipino people because we are going to reduce the stranded contract costs and the stranded debts.”

Next in the privatization line-up in 2022, according to Garcia, is the 150-megawatt Casecnan hydro power plant and the package for that asset sale is already being firmed up.

The Casecnan multi-purpose project will be turned over to the government on December 11 this year by American firm CE Casecnan Water and Energy Company Inc., which is the State’s counterparty in the build-operate-transfer (BOT) contract for that project.

After the Casecnan plant, Garcia stated that the subsequent power plant to be placed on the auction block will be the Caliraya-Botocan-Kalayaan (CBK) hydropower facility. She, however, did not give any details yet on the mode of privatization to be pushed for that asset.

The 25-year corporate life of PSALM will lapse in 2026, hence, the company will just have about five more years to carry out its privatization activities and to fully wipe out the more than P350 billion financial liabilities of its precursor-firm NPC.

Bulk of the company’s outstanding financial obligations, at 59-percent, are denominated in US dollars; 37-percent are in local currency; while 4.0-percent of total debts are in Japanese yen.

As of June this year, the aggregate liabilities of PSALM stood at P367.9 billion – comprising of P267.4 billion debts; and P100.5 billion worth of lease obligations with the independent power producers.