The privatization proceeds from the 165-megawatt Casecnan hydroelectric power plant will greatly help PSALM settle its US dollar-denominated financial obligations that will be maturing next year.
PSALM sees Casecnan financial closing by December
At a glance
The coffers of state-run Power Sector Assets and Liabilities Management Corporation (PSALM) will be shored up by as much as $526 million by the end of this year, with the anticipated payment of Fresh River Lakes Corporation on its acquisition of the 165-megawatt Casecnan hydroelectric power plant (HEPP) in Nueva Ecija.
According to PSALM President and CEO Dennis Edward A. Dela Serna, they have targeted December 2023 for financial closing and turnover of the privatized Casecnan power facility.
“The Casecnan proceeds will help PSALM pay maturing US dollar obligations next year, that’s the main reason for us asking US dollar payment instead of Philippine peso,” he explained.
Based on documents, PSALM's US dollar borrowings falling due next year amount to $385.087 million (approximately P21.611 billion) to be paid to Mizuho Bank, Mitsubishi UFJ Financial Group (MUFG) as well as Land Bank of the Philippines (LBP) and the Development Bank of the Philippines.
Dela Serna noted that the post-qualification process on the successful outcome of the asset’s bidding last May 16 will be concluded this week; and it will be subsequently lodged to the PSALM board for final evaluation and approval before issuance of the notice of award to the winning bidder.
The successful privatization of the Casecnan hydropower facility which had been accomplished with just one round of bidding, had been cheered by the Department of Energy (DOE), the agency that has direct supervision over state-run entities in charge of ensuring reliable power supply for the country.
Energy Secretary Raphael P.M. Lotilla said “the successful privatization of this crucial power plant represents a significant milestone in our efforts to strengthen energy security. With the private sector injecting the necessary efficiency and capital for energy expansion, we can ensure a reliable and resilient energy sector for our nation’s future.”
The winning bidder, which is part of the power generation investment platform of the Lopez-led First Gen, has submitted a price tender way above the PSALM Board-approved reserve price of $227.272 million.
The energy department emphasized that “Fresh River Lakes will undergo a rigorous post-qualification process to verify the accuracy and authenticity of the eligibility documents submitted.”
The PSALM Board, which will bestow final go-signal on the award and turnover of the asset to the winning bidder, is chaired by the Department of Finance (DOF); and the DOE holds the vice chairman post; while the other board members include PSALM, Department of Trade and Industry, Department of Justice and the National Economic Development Authority.
This is the first power asset divestment carried out under the Marcos administration; and it was done seamlessly with just one attempt, hence, that was hailed as a ‘great success’ if compared to the series of failed bids that impeded the privatization of other power facilities in the past administration.