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Saturday, December 2, 2023

PSALM to end corporate life with P113 billion debt

State-owned Power Sector Assets and Liabilities Management Corp. (PSALM) said it expects to have a residual debt of about P113 billion beyond its corporate life, which expires in June 2026.

PSALM president Dennis dela Serna said that because of this debt, there is a need to extend the life of the agency.

PSALM, created under the Electric Power Industry Reform Act of 2001 to manage the assets and liabilities of National Power Corp., is seeking a 30-year life extension.

“We believe, that with regard to the corporate life extension of PSALM, PSALM is in the best position to continue with the sale, to manage all those liabilities and to collect all these receivables because the counter party to those contracts, whether its  collectibles or IPP [independent power producer] contacts that will expire beyond the life of PSALM is PSALM,” Dela Serna said.

Senator Sherwin Gatchalian said in a hearing on Friday that PSALM woud be left with a debt of P113 billion even after its assets are privatized.

“We still need about P113 billion more or less. And if the life of PSALM will not be extended that will be absorbed by the national government. That will form part of the national debt,” Gatchalian said.

Based on the computation of PSALM, it has about P107 billion receivables, P45 billion valuation from the remaining key assets and P42-billion privatization proceeds after 2026 that can be used to pay off the debts.

“For me, if we have assets to privatize, then there is a reason to extend. Obviously the goal here is to extend so that we can square off, we can pay off all the debts with the remaining assets. But even with the remaining assets and the remaining collectibles, it seems like it’s not gonna, we will not have enough cash to pay off the  remaining balance of the P315 billion,”  Gatchalian said.

Dela Serna said PSALM would close the sale of the 165-megawatt Casecnan hydroelectric power plant (CHEPP) in Nueva Ecija in December.

Fresh River Lakes Corp., a subsidiary of the Lopez Group’s First Gen Corp., offered the highest bid amounting to $526 million for the CHEPP.

He said PSALM planned to bid out the 797.92-MW Caliraya-Botocan-Kalayaan hydropower plants by June or July next year.

Dela Serna said they were also looking at an energy transition mechanism for the 210-MW Mindanao coal plant.

“We are also studying with consultants  at ADB [Asian Development Bank] for the early close of that power plant from 2031 to sometime earlier,” he said.

PSALM is also studying the rehabilitation of the Agus-Pulangi hydro complex in Mindanao which is estimated to cost $350 million under the previous estimates of the World Bank, Dela Serna said.

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