PSALM to ask NGCP to prepay remaining $1.2-B concession fee

MANILA, Philippines - The Power Sector Assets and Liabilities Management Corp. (PSALM), the government agency overseeing the privatization of state-owned power assets, said it will ask the National Grid Corp. of the Philippines (NGCP) if it can prepay its remaining $1.2-billion concession fee to the government.

During yesterday’s hearing on the budget of the Department of Energy conducted by the House Committee on Appropriations, PSALM president and chief executive officer Emmanuel Ledesma Jr. said the agency would write NGCP asking if it can pay its concession fee ahead of schedule.

NGCP has already prepaid part of its concession fee to the government amounting to $1.5 billion as of July 2013 and has a remaining balance of $1.2 billion.

“We will ask NGCP, through a letter, if they can prepay the remaining payment under the privatization,” Ledesma said.

A prepayment would allow PSALM to settle the obligations of National Power Corp. (Napocor), the state-owned power generation company.

NGCP won a 25-year concession to run the country’s transmission assets after it took over the management of the country’s national transmission network in 2008 from the state-owned National Transmission Co. (TransCo).

Under the concession agreement, NGCP has to pay the government, through PSALM, some $3.95 billion in concession fees on a staggered basis over the concession period.      – Iris Gonzales

Ledesma said under the agreement, NGCP is required to make a 25 percent downpayment with the 75 percent payable in 20 years.

“Based on the concession agreement, a prepayment would be up to NGCP,” Ledesma.

PSALM has also been in talks with other power players, including San Miguel Corp. and Aboitiz Power, to prepay their fees to the government.

These receivables come from the contracts of independent power producers, which the government privatized.

The amount is around $3.3 billion.

So far, PSALM has generated $3.3 billion from the privatization of the IPP contracts but only around $495 million has been collected.

San Miguel earlier won the bidding to manage the IPP contracts of the 1,000-megawatt Sual coal-fired power plant, 345-MW San Roque hydropower plant and the 1,200-MW Ilijan power plant.

Aboitiz Power, meanwhile, manages the contract of the 700-MW Pagbilao coal power plant in Quezon.