31 Jan 2018
Power Sector Assets and Liabilities Management Corporation’s (PSALM) debt servicing, which spans 16 years (2001-2017), has reached PhP1.47 trillion as of end of 2017, inclusive of interest and other charges. These payments covered PhP555.7 billion maturing IPP obligations, PhP567.7 billion principal debts and PhP346 billion interest and other charges.
In 2017 alone, PSALM settled a total of PhP73.3 billion in financial obligations, broken down into PhP55.9 billion debts and IPP obligations, and PhP17.4 billion interest. Aside from the PhP73.3 billion debt servicing in 2017, PSALM has paid PhP10 billion to the Bureau of the Treasury for its advances to PSALM in 2016 that was utilized to bridge the financing gap.
Funds in settling PSALM’s assumed financial obligations are sourced from collections from its power generation, privatization proceeds, and universal charge. To date, the privatization proceeds that PSALM realized stood at PhP528 billion, while the collection from the stranded contract cost portion of the universal charge reached PhP56.9 billion.
PSALM’s financial obligations peaked to PhP1.24 trillion in 2003 from PhP831 billion in 2000. The bulk of PSALM’s financial obligations are foreign denominated, with a huge portion based in US dollars. Any devaluation of the peso against the US dollar from time to time contributes to the surge in financial obligations. The commissioning of new power plants at that time also led to the spike in the debts’ interests.
The Corporation’s financial management strategies is instrumental in the sustained decline of its financial obligations. As of 2017, PSALM’s financial obligations went down to PhP466.2 billion which registered a decrease of 7.9% from 2016’s level of PhP506.3 billion and a decrease of 62.4% vis-à-vis the 2003 level of PhP1.24 trillion.
The servicing of PSALM financial obligations in the total amount of PhP1.47 trillion could have entirely wiped-out the 2000 figure it assumed from the National Power Corporation had there been no complex and inevitable factors resulting in its increase through the years.
These factors, PSALM is referring to, include the necessary commissioning of new power plants between 2001 to 2006 to prevent the power shortage that paralyzed the country in the 1990s until early 2000, refinancing or new loans to fill the gap when maturing obligations fall due, and the vulnerability of PSALM’s assumed loans to foreign exchange fluctuations. For every 1 PhP depreciation against the USD, PSALM’s financial obligations will increase by PhP7.26 B.
Despite these factors affecting the Corporation’s financial obligations, the level was significantly trimmed down to its level today. It is projected that with PSALM’s continuous privatization efforts including the sale of real estate assets, collection of UC and power generation proceeds, its financial obligations will further decrease substantially when the corporate life of PSALM ends in 2026.
Strategic Communications and Partnership Division |