State-run Power Sector Assets and Liabilities Management Corporation (PSALM) has trimmed its outstanding financial obligations to P355.2 billion as of end-December last year, lower by roughly P26 billion from P381.72 billion in the prior year.

Of the firm’s remaining liabilities, P264.3 billion would account for debts; while P91 billion had been logged as liabilities with contracted independent power producers (IPPs), representing mainly the power purchase agreements (PPAs) underwritten by state-run National Power Corporation (NPC) for power facilities built on a build-operate-transfer (BOT) arrangement with the State.

“Through the continuous implementation of liability management program and strategies, PSALM’s financial obligations were reduced to P355.247 billion as of December 31, 2021,” the government-owned company noted.

It qualified that if calculations would be reckoned from the start of the privatization of the power assets of NPC roughly two decades ago, total liabilities had already been pared by a colossal P885.35 billion from P1.240 trillion in 2003.

In terms of currency, PSALM emphasized that bulk of the financial obligations are denominated in US dollars with a share of 58-percent amounting to P205.67 billion; while those in Japanese yen would account for relatively marginal 5.0-percent or P16.32 billion.

The peso-denominated liabilities of PSALM stood at P133.40 billion, or about 38.0-percent of the remaining outstanding obligations, according to company documents.

Last year, PSALM said it refinanced P33 billion worth of required settlements’ shortfall through fresh loan syndication with the Land Bank of the Philippines, Development Bank of the Philippines and UCPB.

The power firm qualified that the initial drawdown of P21 billion from the loan facility was on May 10, 2021; and the second tranche of P12 billion was released on June 14, 2021.

The main source of funds for the liability management program carried out by PSALM had been proceeds from privatization of the NPC assets -- but since those revenues had not been enough, the government-run firm opted to access new round of borrowings.

In the Duterte administration, the only major asset divestment logged by PSALM was the sale of the 650-megawatt Malaya thermal power facility which fetched P3.12 billion in revenues; while the other NPC properties disposed were mainly real estate assets.

Under the Electric Power Industry Reform Act (EPIRA), the corporate life of PSALM will only be until year 2026, but given the scale of liability management as well as asset disposal it has yet to fully accomplish, it is being lobbied in Congress that its longevity be extended.