PSALM wants debt reduced by P20 billion

By Danessa Rivera – April 23, 2022 | 12:00am
from The Philippine Star

MANILA, Philippines — State-run Power Sector Assets and Liabilities Management Corp. (PSALM) is targeting to cut its debt by P20 billion to P335 billion by end-June.

The agency ended 2021 with financial obligations of P355.2 billion, down from P381.72 billion in 2020, and targets to further reduce the amount to P335.89 billion at the close of the Duterte administration.

With the end-June target, PSALM would have trimmed its financial dues by P202 billion from close to P538 billion in July 2016.

“That’s going to be a P202-billion reduction in financial obligations from the P537.98- billion level on June 30, 2016 right before the start of the Duterte administration,” PSALM president and CEO Irene Joy Besido-Garcia said in her report to Finance Secretary and PSALM board chairman Carlos Dominguez.

Last year, PSALM was able to pay P4.06 billion in debts and P22.41 billion in lease obligations due to independent power producers (IPPs).

The agency’s total revenues from its service and business income; shares, donations, grants; and gains amounted to P79.46 billion, which is higher by 27 percent from the P62.43 billion revenues it recorded at the end-2020, Garcia said.

She said the agency managed its operating expenses well, recording just a two percent increase from P70.11 billion to P71.22 billion.

Overhead expenses accounted for less than five percent PSALM’s total income as the corporation was able to implement substantial cost-cutting measures, while increasing revenue collection through successful privatization activities and higher energy sales.

Garcia said all these strategies allowed PSALM to yield a net surplus of P8.94 billion last year, up 293 percent from its net surplus of P2.27 billion in 2020.

She attributed PSALM’s remarkable growth in net income or surplus to the corporation’s successful privatization activities and the substantial increase in energy sales.

The PSALM official cited the gains from asset privatization, which surged from only P37.5 million to P4.38 billion, and the 27 percent increase in service and business income mainly due to higher energy sales as economic activities started to normalize and more industries resumed operations.

Garcia also said PSALM earned P13.15 billion from power sales, which translates into a 93.5-percent collection efficiency rate, which is 3.53 percent above its scorecard target.

Meanwhile, PSALM’s universal charge (UC) collection efficiency of 98.3 percent enabled the agency to collect P17.93 billion.

As a result, it was able to disburse P13.9 billion to the National Power Corp. (Napocor) for its missionary electrification projects in underserved communities, and another P32 million to renewable energy (RE) developers.

PSALM encouraged power customers with delinquent accounts to enter into board-approved restructuring agreements and special payment arrangements so they could settle their arrears with PSALM. This yielded P1.35 billion for the agency.

Garcia said PSALM was also able to privatize last year the 650-megawatt Malaya thermal plant for P3.18 billion, which includes the plant’s remaining fuel inventory. The disposal price was way beyond the minimum bid price of PSALM.

PSALM also raised P2.7 billion from the sale of 31 lots – composed of 18 lots targeted for disposal last year, 13 that were undisposed in 2020, and 1 lot that was not part of the target.

To mitigate its foreign exchange risks, PSALM raised the share of domestic sources in its borrowing mix, from 34 percent in 2020 to 37 percent. PSALM did not incur new borrowings that were foreign denominated.

“We ensured the timely payment of all maturing interest and borrowing cost of PSALM’s loans amounting to P88 billion,” Garcia said.