22 Aug 2008
The Power Sector Assets and Liabilities Management Corporation (PSALM) prepaid USD126 million and Y10.2 billion, or a total of USD219 million, of National Power Corporation's debt on 15 and 18 August, respectively. 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 August prepayment is the third one undertaken by PSALM this year. In June, PSALM prepaid Y27.2 billion, or around USD263 million, of National Power's debt. The amount represented Tranche B of the Miyazawa yen-denominated loans extended in 1999 by the Japanese government to National Power to finance a number of transmission projects. In March, PSALM prepaid the three yen-denominated loans of National Power worth Y16.887 billion, or around USD174 million. 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 National Power's debt obligation from USD7.01 billion as of end 2007 to USD6.0 billion. The successful prepayment was made possible through the support provided by the Bangko Sentral ng Pilipinas which ensured the smooth processing of the payments," said Lourdes S. Alzona, PSALM's vice president for Finance.
Ferdinand A. Florendo, manager of PSALM's Capital Markets and Risk Management Department, explained that aside from savings on interest payments and guarantee fees, "the prepayment reduced National Power's foreign exchange debt by 4% and increased the peso component of the debt currency mix by 2% to 13%."
"The prepayment is in accordance with the program to improve National Power's liability profile by reducing its exposure to foreign currency fluctuations," Mr. Florendo said.
Pursuant to the 2001 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 National Power.
Strategic Communications and Partnership Division