By Myrna M. Velasco – July 14, 2019, 10:00 PM
from Manila Bulletin
State-run Power Sector Assets and Liabilities Management Corporation (PSALM) logged record receivables of P41.58 billion, the bulk of which at P24.92 billion have been classified as delinquent accounts from power customers, particularly problematic electric cooperatives.
As of end-2018, PSALM indicated that 83 percent of the receivables cover the accounts of problematic electric cooperatives, namely the Albay Electric Cooperative (ALECO); Maguindanao Electric Cooperative, Inc. (MAGELCO); Lanao del Sur Electric Cooperative, Inc. (LASURECO); Pampanga III Electric Cooperative (PELCO); and the Public Utilities Department (PUD) of Olongapo.
“High receivable from delinquent power customer is around P24.92 billion,” the PSALM report has stipulated. Other than the delinquent fraction of the receivables, the company noted that 20 percent is dormant or closed accounts; 5 percent is for negotiation; 3 percent is due for reconciliation; 3 percent had been restructured accounts; 3 percent is current; and 2 percent had been embroiled in legal cases.
The scale of the company’s receivables had been identified among the factors weighing down on its overall financial stature and risk exposure; hence, this is a key area that it needs to improve on.
So far, the company said it already issued final demand letters to customers with payment delinquencies; while at the same time, pursuing restructuring or special payment arrangements with the other accounts.
The government-run company said one of the measures it instituted had been “prepayment of restructured balance through loan assistance from banks that offer lower interests compared to the rate of interest currently being imposed by PSALM.”
With its total liabilities still staggering at P449.19 billion as of end last year, PSALM indicated that it may still “incur losses due to adverse fluctuations in the market rates and prices.”
The company similarly highlighted its foreign currency risks given that 73.5-percent of its financial obligations are denominated in US dollars; and 6.38-percent are in Japanese yen.
“Around 78-percent of PSALM’s financial obligations, which includes IPP (independent power producer) obligations, is exposed to forex fluctuations with estimated sensitivity of almost P6.7 billion for every one-peso movement in forex,” the state-run firm stressed.
It further emphasized that 41.25-percent or P184 billion of PSALM’s outstanding financial obligations “are tied with fixed interest rates from loans/bonds”; while 18.28-percent or P82 billion are with floating interest rates.
The firm similarly cited liquidity risk due to “mismatch between debt maturities and privatization proceeds,” thus, this has been prompting it to fast track the privatization of remaining power assets and supply contracts that are still under its charge.
PSALM’s corporate life is just until 2026, thus, it has been given a strict mandate to liquidate the company’s remaining liabilities either through privatization of remaining assets or the proposed utilization of the Malampaya fund to retire its debts via the support of a legislative measure.