PSALM to fold up in 9 years

by Myrna Velasco – August 21, 2016

from Manila Bulletin

The government is seriously considering to finally terminate the operations of the Power Sector Assets and Liabilities Management Corporation (PSALM) at the culmination of its corporate life in 2026, just more than nine years away.

“We are not batting for any extension of our corporate life,” PSALM Officer-in-Charge Lourdes S. Alzona has noted, indicating further that this is also the direction that their principals at the Departments of Finance and Energy have been looking at.

 

PSALM, which was set for corporate longevity of 25 years, was established in 2001 when the Electric Power Industry Reform Act took effect. It was vested with the dual mandate of privatizing the assets of the National Power Corporation (NPC) and managing the power sector’s liabilities.

Alzona explained that, if there would be some undisposed assets at the end of PSALM’s corporate life, “these will be turned over as net assets to the national government.”

She said this will likely include the Agus-Pulangui hydropower plants that may be blocked on the privatization route because of the continuing opposition of stakeholders; and the remaining concession fees of the National Grid Corporation of the Philippines (NGCP) as well as the remittances of the Independent Power Producer Administrators (IPPAs) for privatized power supply contracts.

At this stage, Alzona noted that their fervent goal is to just wipe out the universal charge (UC) component in the electric bills, as she stressed that “it is not a practical reason extending PSALM’s corporate life just because of the UC recoveries.”

The national government is already scouring for measures to address that. Thus, the only remaining job for PSALM is to continue divesting power assets to beef up its coffers so it can fully retire its estimated P245 billion worth of stranded liabilities and financial obligations.

PSALM still has several assets up for disposal – not just power plants and supply contracts of the independent power producers (IPP), but also real estate and the art collection of the National Power Corporation.

For the power plants alone, previous estimates of the company portend that they can still fetch additional privatization revenues of roughly $3.0 billion. These could cover the Leyte bulk IPP capacity, Mindanao coal plant, Caliraya-Botocan-Kalayaan (CBK) hydro plant, Malaya thermal facility; Casecnan hydropower plant as well as the Agus-Pulangui hydropower facilities; and the decommissioned power facilities that are being sold as “scrap” to interested takers.

The company also cast strategic plans to unload its real estate properties, such as the sites of decommissioned power plants; lands not related to power generation; lands under land lease agreements – including those previously offered to new power plant owners but remain unsold; the lands adjacent to or near privatized power plants; or the lands adjacent to or near the remaining unsold power plants as well as the facilities of PSALM which are still under contracts with independent power producers.

 

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