PSALM eyes sale of real estate assets

MANILA, Philippines — State-run Power Sector Assets and Liabilities Management Corp. (PSALM) is eyeing to rationalize its real estate assets to bring down its financial obligations while waiting for the go-ahead on the sale of government-owned power plants.

PSALM officer-in-charge Lourdes Alzona said the agency is reviewing its remaining real estate assets while waiting for the direction on the Malaya power plant sale from the Department of Energy (DOE).

“The remaining asset in our schedule this year is Malaya plant,” she said. “While awaiting the needed direction, the focus is profiling our real estate assets in addition to liability management to service outstanding financial obligations.”

Alzona said PSALM would undertake measures on its properties as long as it is “legally feasible.” “We are coordinating with PEZA (Philippine Economic Zone Authority) to maximize value of these assets,” she said.

PSALM is the entity created by the Electric Power Industry Reform Act (EPIRA) of 2001 to privatize government-owned power assets.

In addition to power assets, the law also directed PSALM to take ownership and implement a sale or privatization program for real estate and all other disposable assets.

Data from its website showed PSALM has real estate assets with an aggregate land area of around 100 million square meters (sqm), consisting of 6,160 lots located in various parts of the country.

Around 60 percent of the total land area is located in Luzon, 39 percent in Mindanao and the remainder in the Visayas.

Alzona said the agency has P5 billion worth of real estate that could be sold, but it needs to identify which ones could be privatized since these involve around 10,000 hectares of properties.

Scattered across the country, some of the real estate properties include the Puerto Azul Resort in Cavite and a property in Bagac, Bataan.

As of end-June, PSALM’s remaining obligations amount to P490 billion.

PSALM reduces debts through the privatization of assets under National Power Corp., collection of the proceeds and PSALM’s effective implementation of its liability management program.

The completion of the privatization program will also help PSALM avoid operational losses from expensive power plants and independent power producer (IPP) contracts.

PSALM said deficiencies in obligations on the part of IPP administrators (IPPAs) are addressed according to the terms stipulated under the IPPA administration agreement (IPPA AA).

However, Alzona said discussions and agreements which transpired between PSALM and the IPPAs are all elevated to the PSALM board for final direction before these become relevant and binding.

“As to the implementation of Unified Leyte Geothermal Power Plant (ULGPP), through PSALM trading strategies, it is ensured that the strips of energy are fully dispatched, providing IPPAs security from market volatility. PSALM assists IPPAs in their bilateral contract applications with the Energy Regulatory Commission by providing them support documents used as basis for approval by the regulatory body,” it said.

PSALM said it would exhaust all diplomatic steps before the necessary termination of IPPA AAs is put into effect due to administrator’s default. Negotiations and mediations which are more amicable schemes are used for dispute resolution in accordance with the AAs.

Last week, Phinma Energy Corp. filed civil cases at the Makati Regional Trial Court against PSALM and its former president and CEO Emmanuel Ledesma for unduly scrapping its IPPA contract to administer strips of energy of the ULGPP on grounds of administrator’s default.