Power Sector Assets and Liabilities Management Corp. which was formed in 2001 to dispose of state-owned power assets will cease as a company by June 2026 and leave the government with about P208 billion in debt, an official said Thursday.
PSALM president Irene Garcia said the agency would incur the estimated P208-billion deficit at the end of its life under Republic Act No. 9136, or the Electric Power Industry Reform Act.
“That’s an approximation and it will still move depending on various factors,” Garcia said when asked to clarify her pronouncement during a Senate hearing.
Garcia said many factors could affect the projected deficit, such as exchange rate, borrowing conditions, collections, privatization activities, defaulting customers, rate of national government’s guarantee and approvals of the Energy Regulatory Commission of its rate adjustments.
PSALM has 25 years from the effectivity of EPIRA law in 2001 to fulfill its twin mandates unless extended by law.
Under the law, all assets of PSALM, money and properties belonging to it and outstanding liabilities will revert to and be assumed by the national government at the end of its corporate life.
PSALM began operations on July 1, 2001 with the primarily mandate to privatize the assets of the National Power Corp. PSALM was able to pare down its financial obligations to P393.3 billion as of end-June.
“For this year alone, notwithstanding the pandemic we have already reduced the financial obligations down to P393.3 billion. For the first half of 2020, we paid already P28.8 billion,” Garcia said earlier.
PSALM’s financial obligations include debts, interest and other charges and independent power producer lease obligations.
The agency’s financial obligations peaked at P1.24 trillion in 2003.
“On liability management, in 2019, we were able to reduce the financial obligations by P27.2 billion in terms of principal amounts of financial obligations from a high of P1.2 trillion that was passed on to PSALM from NPC,” Garcia said.
PSALM announced in May that it would secure a loan of P43 billion from the Development Bank of the Philippines to cover other maturing obligations in 2020.
PSALM said the loan was needed because the revenues from privatization proceeds, power sales, delinquent and overdue accounts collections and universal charge stranded debts proceeds would not be sufficient to cover all the maturing obligations and operating expenses.
PSALM so far raised P911.98 billion from privatization projects and collected P624.86 billion from the total.
Garcia said PSALM would continue to work with the privatization of the remaining assets of NPC such as the 650-megawatt Malaya Thermal Power Plant this year.
PSALM is also studying the disposal options for the 728-megawatt Caliraya-Botocan-Kalayaan hydro power plants and the 140-MW Casecnan multi-purpose project in 2021 and 2022, respectively.
PSALM said it would also continue with the disposal of real estate assets.