PSALM develops strategic plan for real estate assets

22 Dec 2014

The Power Sector Assets and Liabilities Management (PSALM) Corporation has developed a strategic plan for the management and privatization of its real estate properties, the government's power privatization firm announced.

"As stipulated in Republic Act No. 9136, the Electric Power Industry Reform Act (EPIRA), PSALM is mandated to ensure the orderly privatization of government's power and related disposable assets. Aside from the transmission business, power assets and independent power producer (IPP) contracts which, for the past years, have been the focus of PSALM's privatization activities, the real estate assets of PSALM are likewise a potential source of revenue for the liquidation of its financial obligations," PSALM President and Chief Executive Officer Emmanuel R. Ledesma, Jr. explained.

"With an estimated 100 million square meters (100,438,788 sq.m.) of land in its portfolio, the plan hopes to aid in the further reduction of PSALM's residual debt, as well as help in the government's energy security thrust and facilitate local and national development by identifying possible sites for future power facilities and/or new economic ventures," Mr. Ledesma added.

The project, "Strategic Plan for PSALM's Real Estate Assets: Towards Debt Liquidation, Energy Security and Development", categorizes PSALM's various land and land holdings, and provides possible approaches to maximizing their potentials, either through privatization or asset management. Among the legally-feasible modes identified in the plan are through outright sale, lease and operation and management/maintenance by another person or entity.

The plan proposes to conduct the privatization program for its real estate assets in the following priority:

1. Sites of decommissioned power plants
2. Lands not related to power generation
3. Lands under land lease agreements, which were previously offered for sale to new power plant owners or successor generating companies (SGCs) but remain unsold
4. Lands adjacent to or near privatized power plants or IPP plants
5. Lands adjacent to or near the remaining power plants and IPP plants of PSALM

Mr. Ledesma specified that inalienable lands will be excluded from the privatization program.

He added that PSALM hopes to set into motion the privatization program for its real estate assets in 2015 after Board approval.


Stakeholders Interface

Mr. Ledesma said PSALM partnered with various stakeholders in coming up with its recommendations for the strategic plan.

In September, PSALM conducted benchmarking and consultation workshops with representatives from the academe, private power companies, and energy sector and other relevant government agencies for the formulation of PSALM's strategies and parameters of the program.

PSALM's project team likewise conducted site visits at selected real estate assets for a better appreciation of the current circumstances affecting the value and productivity of the assets, including specific concerns regarding on security, encroachment, and the presence of informal settlers. Consultations were also held with selected local government units, SGCs and IPP operators to gather information on their plans and programs, which may involve and/or affect PSALM's properties. The assets covered in the project were the Tiwi geothermal power plant in Albay and Agusan hydroelectric power plant (HEPP) in Bukidnon, for PSALM assets located in sold power plants; the Bagac Hotel and Training Center in Bataan, for non-power assets; the Cebu II diesel power plant in Cebu, for decommissioned power facilities; the Agus VI HEPP in Lanao del Norte, for PSALM's remaining power plants; and the San Roque HEPP in Pangasinan, for assets located in IPP plants.


Asset Universe

Based on its latest database, PSALM's real estate assets consist of 6,414 lots with an aggregate area of 102 million sq.m. (102,414,458 sqm). With a total of two million sq.m. (1,975,670 sq.m.) already sold to SGCs, a total of 100,438,788 sq.m. consisting of 6,160 lots were considered for the project. These are classified as alienable and disposable (5,991 lots with a total area of 74,878,955 sq.m.); inalienable (107 lots with a total area of 22,367,145 sq.m.); and lands with ongoing titling documentation (62 lots with a total area of 3,192,687 sq.m.).

Per location, 60% (4,771 lots with a total area of 59,821,616 sq.m.) of the real estate assets are located in Luzon, 39% (1,284 lots with a total area of 39,260,003 sq.m.) are in Mindanao, and 1% (105 lots with a total area of 1,357,169 sq.m.) are scattered in the Visayas region.

Strategic Communications and Partnership Division
Tel. No. (632) 9029067