PSALM prepays another $219 M of Napocor’s debts

The Power Sector Assets and Liabilities Management Corp. (PSALM) has paid in advance another $219 million worth of National Power Corp.’s debt.

The amount represents the loans extended by the Asian Development Bank and the Japan Bank for International Cooperation (JBIC) for the Masinloc coal-fired thermal project which was successfully privatized last year.

The latest prepayment is the third one undertaken by PSALM this year. In June, PSALM prepaid ¥27.2 billion, or around $263 million, of Napocor’s debt.

The amount represented Tranche B of the Miyazawa yen-denominated loans extended in 1999 by the Japanese government to Napocor to finance a number of transmission projects.

In March, PSALM prepaid the three yen-denominated loans of Napocor worth ¥16.887 billion, or around $174 million.

According to PSALM, these loans were extended in 1995 and 1997 by the JBIC-Overseas Economic Cooperation Fund to finance a number of transmission projects.

“The total prepayment to date has contributed significantly to reducing Napocor’s debt obligation from $7.01 billion as of end-2007 to $6 billion,” PSALM said.

“The successful prepayment was made possible through the support provided by the Bangko Sentral ng Pilipinas which ensured the smooth processing of the payments,” Lourdes S. Alzona, PSALM’s vice president for finance, said.

Ferdinand A. Florendo, manager of PSALM’s Capital Markets and Risk Management Department, said aside from savings on interest payments and guarantee fees, “the prepayment reduced Napocor’s foreign exchange debt by four percent and increased the peso component of the debt currency mix by two percent to 13 percent.”

“The prepayment is in accordance with the program to improve Napocor’s liability profile by reducing its exposure to foreign currency fluctuations,” Florendo said.

Pursuant to the Electric Power Industry Reform Act, proceeds from the privatization of the government’s electricity assets are used by PSALM to liquidate the financial obligations of Napocor.   — Donnabelle Gatdula