By Myrna M. Velasco
State-run Power Sector Assets and Liabilities Management Corporation (PSALM) is firming up plans to tap fresh loans of US$1.1 billion that it will utilize to settle maturing debts that are requiring bullet payments this year.
“We are in discussion now for a syndicated loan of US$1.1 billion to cover a bullet maturity of NPC (National Power Corporation) loans that will mature in the middle of 2019,” PSALM President Irene Joy B. Garcia has disclosed.
It has to be culled that at NPC’s privatization and following the power sector’s comprehensive restructuring, all of its financial obligations had been transferred to its successor-firm PSALM, hence, the latter takes charge of paying off debts that are falling due.
Based on previous disclosures of PSALM, the heftiest amount of debt payment due this year is P50 billion, accounting for the global bonds that the company had tapped in 2009.
Other than that, the company has another P31 billion worth of loans that are set for regular amortization as well as bullet payment.
On the company’s colossal foreign exchange (forex) losses last year that subsequently weighed heavily on its bottom line, Garcia noted that such financial liabilities had already been covered by loans secured in 2018. The planned new loans, according to Garcia, “is not at all related to forex losses in 2018.”
The PSALM chief executive similarly emphasized that the company utilized up to P78.66 billion for payment of its financial obligations last year – accounting for principal amount of the credit facilities plus interest charges; then for cost of borrowing and forex losses.
From that level of debt settlement, Garcia indicated that “this amount brought down our remaining unpaid principal obligations to P449.94 billion by end of December 2018” – from its highest of P1.24 trillion prior to NPC’s privatization.
Totally expunging the liabilities of PSALM remains one of the biggest headaches for Finance Secretary Carlos G. Dominguez III, who is the chairman of the company’s board.
The asset-seller firm’s corporate life will end in year 2026, hence, there are suggestions that its remaining liabilities be covered by the Malampaya fund so Filipino consumers could be eternally freed from paying additional costs via the universal charges line items in their electric bills.
With its remaining six-year life, PSALM has been accelerating privatization and divestment of remaining assets so it can also raise additional cash to wipe out the power sector’s humongous financial liabilities.