PSALM trims debt to P371 billion as of October

MANILA, Philippines — State-run Power Sector Assets and Liabilities Management Corp. (PSALM) has managed to continuously trim its debt as it surpassed its collection efficiency target this year despite the COVID-19 pandemic.

PSALM president and CEO Irene Joy Besido-Garcia said the agency reduced its outstanding financial obligations from P422 billion at the start of the year to P371 billion as of end-October.

This consists of outstanding debts amounting to P252.16 billion and IPP lease obligations of P119.02 billion.

“We are in the midst of a pandemic and it is really a challenge to timely collect payables. Times are hard. We need to double our efforts. We were even constrained to give several payment extensions to our power customers pursuant with the orders of the Energy Regulatory Commission   and Department of Energy,” Besido-Garcia said.

“But we are thankful that we in PSALM are still able to collect efficiently, settle the maturing debts, and continue to bring down the financial obligations,” she said.

Due to the COVID-19 pandemic, the ERC and DOE directed collecting agencies and companies to allow grace periods for due dates falling within strict quarantine periods, and payments in monthly installments – all without incurring any interest, penalties and other charges.

Earlier this year, PSALM secured a loan of P43 billion from the Development Bank of the Philippines to cover other maturing obligations for the rest of the year. It made its first drawdown from the said loan in  June.

The loan will be needed because, while PSALM anticipates revenues coming from privatization proceeds, power sales, delinquent and overdue accounts collections, and universal charge stranded debts proceeds, these revenues are not sufficient to cover all the maturing obligations and operating expenses for the rest of the year.

This year, the PSALM board set the collection efficiency target at 93 percent.

“I am happy to say that notwithstanding the pandemic, we actually surpassed our efficiency target with a collection efficiency rate of 93.68 percent as of September 2020 with corresponding actual collection of P9.51 billion from the start of the year,” Besido-Garcia said.

This is compared to the agency’s collection efficiency rate of 93.56 percent with a total collection of P11.76 billion in 2019.

Last year, the Department of Finance (DOF) mandated to raise the state-run firm’s collection in 2020, with Secretary Carlos Dominguez backing the agency in improving its operations.

As approved by the DOF, PSALM has allowed flexible payment schemes to encourage entities and electric cooperatives (ECs) with non-current or delinquent accounts to settle their outstanding obligations.

Part of the uncollected accounts are from Lanao del Sur Electric Cooperative Inc. (Lasureco) and Maguindanao Electric Cooperative Inc. (Magelco).

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

It reduces debts through the privatization of government-owned assets, collection of the proceeds and its effective implementation of its liability management program.