PSALM to seek board’s definitive plans on Malaya, Mindanao asset sale

By Myrna M. Velasco – January 19, 2018, 11:08 AM
from Manila Bulletin

State-run Power Sector Assets and Liabilities Management Corporation (PSALM) will be securing “definitive direction” from its board of directors on the proposed divestment package for the 650-megawatt (MW) Malaya thermal power plant as well as the privatization of the supply contract of its 210MW Mindanao coal-fired power facility.

These are the assets on privatization lined up by the company so it can shore up profitability and for it to pare its swelling financial obligations.

“PSALM will seek its board’s definitive policy on the privatization of Malaya thermal power plant and Mindanao coal-fired power plant,” the state-run firm has noted. As previously indicated, the Department of Energy (DOE) requires conversion of the Malaya plant into a gas-fired power asset at its divestment phase. For the Mindanao coal plant, previous proposals hinged on prospective buy-out of its supply contract, after which, PSALM will have to pursue the asset’s direct sale.

PSALM said it has yet “to receive final word from the DOE on the natural gas policy which will be included in the plant’s sale terms of reference.”

For the Mindanao coal-fired power facility, it was noted that PSALM “may further await an appropriate time to offer the plant on the sale block.”

The state-run firm indicated that since Mindanao grid is now on oversupply mode, “the plant may not attract maximum investment.”

Despite some stumbling blocks, PSALM asserted that it “is bent on achieving its privatization targets this year, particularly the sale of its expensive plants to cut on operational costs and to augment funds for paying-off its assumed obligations that will significantly benefit the government and the electricity end-users.”

With additional proceeds from sale of assets, PSALM will have greater wherewithal to pay off debts – that in turn, could bring down its debt level and will ultimately reduce its pass-on of universal charges to consumers.

Other assets on the company’s privatization queue are 231 lots that shall form part of its real estate privatization program; as well as the Manila thermal and Bauang diesel plants.