PSALM plans to borrow P43 billion

MANILA, Philippines — State-run Power Sector Assets and Liabilities Management Corp. (PSALM) plans to borrow P43 billion to settle its maturing debt this year.

In a statement, PSALM said it intends to secure a loan from the Development Bank of the Philippines (DBP) to cover maturing obligations for the year.

PSALM has already obtained the approval of the Department of Finance (DOF) to implement the first drawdown from the loan by June 2020.

“This loan will be needed because while PSALM anticipates revenues coming from privatization proceeds, power sales, delinquent and overdue accounts collections, and UC stranded debts proceeds, these revenues will not be sufficient to cover all the maturing obligations and operating expenses for the rest of 2020,” it said.

So far, PSALM has reduced its financial obligations by P17.7 billion in the second quarter despite the coronavirus disease 2019 or COVID-19 pandemic.

Its financial obligations fell to P404.28 billion from P422.01 billion at the start of the year.  The amount consisted of outstanding debts and independent power producer (IPP) lease obligations as of May 14.

PSALM said it had sufficient funds to pay all its maturing obligations in the first five months of the year even those that fell due during the enhanced community quarantine.

Its liquidity was due to the company’s efficient performance in 2019 and in the early months of 2020, notwithstanding the deferment of substantial revenue collections during the quarantine as ordered by the Energy Regulatory Commission (ERC) and the Department of Energy (DOE) on COVID-19.

“PSALM has been paying its maturing debts and IPP obligations, including interest and other charges, despite the (quarantine) and the deferment of revenue collections from power bills, certain IPPA payments and the universal charge. There are certainly serious financial setbacks caused by COVID-19 and the quarantine, but PSALM will not default on any of its maturing obligations,” PSALM president and chief executive officer Irene Joy Besido-Garcia said.

PSALM is the agency mandated by EPIRA of 2001 to handle the sale of the remaining state power assets and the financial obligations of National Power Corp.