MANILA, Philippines - The Department of Finance (DOF) said the Power Sector Assets and Liabilities Management Corp. (PSALM) will no longer borrow this year.
Finance Undersecretary Jeremias N. Paul told reporters that they believe that PSALM’s financial requirement for 2010 has been fully covered.
He said they do not expect any pre-payment this year unless opportunities come along the way. “I don’t think there would be pre-payment, it may be more on liability management,” he said. “But if there is an opportunity, why not.”
PSALM’s financial position, particularly its borrowing scheme, is now under close scrutiny by the DOE.
PSALM is an entity created under Republic Act 9136 or the Electric Power Industry Reform Act (EPIRA) which now manages the finances and privatization of the state-owned National Power Corp. (Napocor).
Paul said there is also no problem to account all the privatization proceeds of the National Power Corp. (Napocor) which is entrusted to PSALM. “I don’t think there would be a problem accounting for these proceeds,” he said.
While privatization proceeds keep coming in, it should be noted that PSALM was and is also on a borrowing spree. Earlier this year, it was given approval to raise P30 billion to P50 billion through domestic bonds and it plans to raise another $1 billion for refinancing of debts for 2011.
As of end-December 2009, Napocor’s outstanding debt stood at $16.5 billion, 40 percent of which is set to mature starting this year until 2014. For 2010, Napocor has around $3 billion worth of maturing loans.
Based on the application of PSALM, it would need to recover P470.8 billion worth of stranded debts and P22 billion stranded contract costs of the Napocor.
PSALM submitted two options to recover the P471 billion stranded debts. One is by charging electricity consumers 30 centavos per kWh for 17 years or 22.5 centavos per kWh for 25 years.
For the stranded contract cost, PSALM proposes three options: 50.24 centavos per kWh for one year recovery period; 16.04 centavos for a three-year period; 9.20 centavos per kWh for a five-year period.
ERC earlier pointed out that PSALM must be able to convince the commission that its rate petitions are substantiated.