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Published
By Myrna M. Velasco
The state Electricity Assets and Liabilities Management Corporation (PSALM) was able to cut debts from the electricity sector by ₱ 27 billion last year to ₱ 422.01 billion at the end of December compared to ₱ 449.2 billion for the whole year in 2018.
Of the total remaining energy obligations, ₱ 273.38 billion comprised debts; while ₱ 148.62 billion represented lease obligations to contracted independent power producers (IPPs) from the privatized National Energy Corporation.
Since the approval of the Electric Power Industry Reform Law (EPIRA) and the divestment of government-owned energy assets, it was PSALM who duly assumed the financial obligations of NPC and was also given the mandate to pay those liabilities .
“In currency terms, more than half or 68 percent of PSALM’s financial obligations are denominated in US dollars, amounting to ₱ 286.98 billion,” said the state company.
He added that the financial liabilities denominated in pesos are still around ₱ 106.47 billion or 25.2 percent; while the remaining obligations of ₱ 28.57 billion or 6.8 percent are in Japanese yen.
According to last year’s calculation of outstanding debts, the PSALM indicated that the exchange rates used were: ₱ 50.7440 per US dollar; and ₱ 0.4629 per Japanese yen, and these have been based on the Bangko Sentral ng Pilipinas guide rates.
The intent of the EPIRA law was to use the proceeds of the privatization of the energy assets to withdraw the debts of the NPC-PSALM, but even after the sale of most of the government’s generation facilities and power transmission assets , residual financial obligations were still mounting.
PSALM has been aiming to continually privatize the remaining energy assets, but given the drawbacks posed by the blockades due to the coronavirus pandemic, the challenges may be even more difficult in the coming months or even next year.
The company is lining up the sale of the 650 megawatt Malaysian thermal power facility this year, but that process is now affected by extensions of Enhanced Community Quarantine (ECQ) and is compounded by the very low price offers previously offered for the active .
PSALM is also aligning the divestment of various real estate assets, and is expected to continue until the end of the state-owned company’s corporate life in 2026.
As expected, any outstanding debt or financial obligations and even unsold assets at the end of the PSALM life cycle must be turned over to the national government.
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