by Lenie Lectura – February 8, 2016
from Business Mirror
The Power Sector Assets and Liabilities Management Corp. (PSALM), the agency managing the assets and liabilities of National Power Corp. (Napocor), still has to settle over P500 billion in debts after it paid nearly P80 billion last year.
“The outstanding financial obligations as of December 31, 2015, stood at P550.81 billion. This is broken down into P305.41-billion debts and P245.40-billion lease obligations,” PSALM Corporate Planning Manager Emy Blanco informed the BusinessMirror.
The state firm’s obligations paid in 2015 amounted to P55.398 billion, Blanco said. Of the amount, P29.041 billion were principal debts serviced, including debt prepayment of P6.32 billion, while independent power producer lease obligations serviced amounted to P26.357 billion.
In addition to the debts serviced, the PSALM official said interests on principal debt amounting to P23.353 billion were also paid in 2015.
In all, PSALM paid P78.751 billion last year.
PSALM, she added, sourced internal funds—from operations of remaining plants and collection of privatization proceeds—to pay portions of its debts in 2015.
The remaining obligations would also be settled through privatization revenues.
PSALM Vice President for Finance Lourdes Alzona, who is also the agency’s officer in charge after she stepped down last month as PSALM’s president, said the state firm intends to sell the remaining power-related assets and use the proceeds to pay off the remaining debts of the Napocor.
Among the assets lined up for privatization in 2016 are the 32-megawatt (MW) power barge (PB) in Mindanao; the Unified Leyte Geothermal Power Plant’s (ULGPP) remaining contracted capacity; and the decommissioned 850-MW Sucat Thermal Power Plant (STPP).
“Regarding update on privatization, in the schedule for the coming year, are the disposal of PB 104, UL Bulk energy, which may include the 40-MW remaining strip of energy, and the Sucat decommissioned plant,” Alzona said in a text message.
PB 104, which began operating in 1985, is moored in Davao City. It generates electricity from thermal sources and operates as a subsidiary of the Napocor.
PSALM already attempted to auction PB 104, but failed thrice. It is now contemplating on conducting a negotiated bid. Alzona said PSALM is just waiting for an opinion from the Office of the Government Corporate Council with regard to the negotiated sale.
PSALM is also looking at a negotiated sale of the ULGPP, which is composed of the 125-MW Upper Mahiao plant; 232.5-MW Matlibog plant; 180-MW Mahanagdong plant; and 51-MW optimization plants.
The Unified Leyte Geothermal Energy Inc., a subsidiary of Lopez-led Energy Development Corp., expressed its willingness to negotiate directly with PSALM for the ULGPP Bulk Energy.
For the STPP, PSALM is bidding out the structures, plant equipment, auxiliaries and accessories of the decommissioned plant on an “as is, where is” basis. The bidding is set on February 17. Ten firms participated in the prebid conference held last November 27.
PSALM expects to optimize the proceeds to be generated from these remaining assets, and to use the revenue to help liquidate the financial obligations it assumed from the Napocor.
In 2014 proceeds from the sale of state-owned power assets reached P20. 8 billion.
Moreover, Alzona said PSALM plans to sell some real-estate assets, as well.
“The said plans will be over and above the Universal Charge administration and other regular activities to support the liquidation of PSALM’s financial obligations, that being its main mandate,” the PSALM official said.
PSALM is the agency mandated by Republic Act 9136, or the Electric Power Industry Reform Act (Epira) of 2001, to handle the sale of the remaining state power assets and financial obligations of the Napocor. The government transferred Napocor’s assets and debts to PSALM in 2008.
Alzona, in an earlier interview, said proceeds from the privatization of the generation assets are not enough to pay off Napocor’s obligations. Thus, PSALM is evaluating other possible ways by which the government could reduce its obligations, one of which, she said, is the sale of real property.
“As to plans for 2016, further to our main mandate to reduce PSALM financial obligations out of disposal of power assets, PSALM may have to focus on strategic plan for real-estate management,” she said when asked of the state firm’s plans and priorities for 2016.
She did not say what real- estate-related assets are left to sell. The PSALM official pointed out though that this, if successfully carried out, would improve PSALM’s financial position.
“This is in a development phase that would include sale, transfer and management of lots, and other real properties. It will give substantial contribution in improving our capability to pay off Napocor debts,” Alzona said.
Over the years, Alzona said PSALM was able to reduce liabilities by continuously implementing a liability-management program. She said this would be continued until PSALM is able to pay off Napocor’s debts.
The agency has 25 years from the enactment of the Epira to fulfill its mandate, unless otherwise extended by law. At the end of its corporate life, all of its assets and liabilities will revert to the national government.