PSALM plans to sell remaining assets to pay off Napocor debts

by Lenie Lectura – December 29, 2015

from Business Mirror

THE state-owned Power Sector Assets and Liabilities Management Corp. (PSALM) intends to sell its remaining power-related assets next year to pay off the remaining debts of the National Power Corp. (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 the 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 decommissioned plant in Sucat,” PSALM President Lourdes 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 regarding the negotiated sale.

PSALM is also looking at a negotiated sale of the ULGPP, composed of the 125-MW Upper Mahiao plant; the 232.5-MW Matlibog plant; the 180-MW Mahanagdong plant; and the 51-MW optimization plants.

Unified Leyte Geothermal Energy Inc. (ULGEI), 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, 2016.

There were 10 firms that participated in the pre-bid conference held on November 27.

PSALM expects to optimize the proceeds to be generated from these remaining assets, and to use the revenue to contribute to liquidating the financial obligations it assumed from the Napocor.

Alzona said PSALM also plans to sell some real-estate assets.

“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 chief said.

PSALM is the agency mandated by Republic Act 9136, or the Electric Power Industry Reform Act of 2001, to handle the sale of the remaining state-power assets and the financial obligations of the Napocor. The government transferred Napocor’s assets and debts to PSALM in 2008.

In an earlier interview, Alzona 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 this, 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 said that this, if successfully carried out, will 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.

As of September 2015, Alzona said in the same interview that PSALM’s obligations stood at P565 billion.

Including interest that would still be due until the maturity of said obligations, PSALM’s total debt would amount to P674 billion, 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 extended by law. At the end of its corporate life, all of its assets and liabilities will revert to the national government.