PSALM brings down liabilities to P416B as of end-October ’19

By Lenie Lectura -December 9, 2019
from Business Mirror

THE  Power Sector Assets and Liabilities Management Corp. (PSALM) has trimmed down its financial liabilities by P33.2 billion this year, bringing its outstanding balance to P416 billion as of end-October this year.

“PSALM has successfully reduced the outstanding financial obligation of the National Power Corp. (NPC) by P33.2 billion this year. At end 2018, the obligation was at P449.2 billion. As of end October 2019, the obligation is down to P416 billion,” said PSALM President Irene Joy Garcia.

PSALM is the entity created by the Electric Power Industry Reform Act, the law that restructured the power industry by privatizing the assets of NPC.

The obligation transferred to PSALM was at a high of P1.24 trillion. This is on top of the P16-billion loans of electric cooperatives (ECs) with the National Electrification Administration that were assumed by PSALM.

Funds in settling PSALM’s assumed financial obligations are sourced from collections from its power generation, privatization proceeds and universal charge.

PSALM has successfully adopted new disposal modes and simplified the public bidding procedures to attract more bidder. It sold this year a total of 166 lots, raising revenues of P1,474,415,882.36.

It also entered into short-term lease agreements over certain assets that are not yet scheduled for privatization in order to raise revenues. This move resulted in total additional lease revenues of P18.8 million for 2019.

PSALM earlier reported that independent power producer administrators (Ippas) and ECs dominate the list of the top corporate entities with long overdue accounts with the agency, amounting to a combined P59.23 billion as of December 2018. A number of these accounts were transferred by the NPC to  PSALM.

Garcia said PSALM allowed flexible payment schemes to encourage entities and ECs with delinquent accounts to viably settle their outstanding obligations.

“Through restructuring agreement and special payment agreement schemes, PSALM puts less pressure on their creditors while allowing them to improve their operations,” said Garcia, adding that PSALM has collected P2,617,722,812.38 in noncurrent arrears from various entities.

It said that it achieved a collection efficiency of 93.71 percent, thereby collecting from PSALM’s customers a total of P9.28 billion from January to September this year.

“The uncollected accounts are those from Lanao del Sur Electric Cooperative and Maguindanao Electric Cooperative, and we have been closely coordinating with the Department of Energy on how this matter may be resolved to lessen the financial exposure of PSALM,” said Garcia.

To address the remaining stranded contract costs (SCC) and stranded debts (SD), PSALM actively lobbied in the Senate and in the House of Representatives for the passage of the Murang Kuryente Act, or RA 11371, which was signed into law by President Duterte last August 8.

This law allocates P208 billion from the Malampaya fund to cover shortfalls of PSALM and effectively pay for the stranded contract costs and stranded debts of NPC. This saves consumers from additional universal charge imposition of about P0.86 per kilowatt hour (kWh).

The state firm earlier secured    regulatory approval for the UC-SCC for 2014 amounting to 5.43 cents per kWh to be collected up to June 2020. Currently, PSALM’s UC for SD amounts to 4.28 cents per kWh to be collected up to the end of PSALM’s corporate life. Total UC for PSALM is thus  at 9.71 cents per kWh.

For 2019, UC-SD collections reached P2,507,404,716.41, while UC-SCC reached P2,547,897,377.16, or a total of P5,005,302,093.59. After using aggressive collection strategies, PSALM said it was able to collect this year certain long-standing arrears amounting to P68.90 million from eight out of 11 ECs with unremitted UC.

It is projected that with PSALM’s continuous privatization efforts, including the sale of real-estate assets, collection of universal charge and power generation proceeds, and financial obligations will further decrease substantially when the corporate life of PSALM ends in 2026.