While its corporate life will already end in two years, the outstanding financial obligations of state-run Power Sector Assets and Liabilities Management Corporation (PSALM) is still at a whopping P292.486 billion as of end-April this year.

According to the company, its total debts stand at P254.6 billion; while its remaining lease obligations to independent power producers (IPPs) had already been trimmed significantly to P37.9 billion.

As prescribed under the Electric Power Industry Reform Act (EPIRA), the corporate life of PSALM will be for 25 years – and that shall end by June 2026, if Congress cannot pass a law that will extend its existence.

A proposed legislative measure seeking longer cycle of corporate existence for PSALM had been filed in Congress, but its passage into a law has not been gaining traction until this time.

If the company could not be given new legal mandate to stretch its corporate life, then its remaining assets and liabilities will have to be transferred to the national government.

Based on data from PSALM, its level of debts actually climbed by P5.3 billion if reckoned from end-2023 level at P249.3 billion; and sources noted that had been mainly traced to the depreciating value of the Philippine peso versus the US dollar.

PSALM qualified that in terms of currency, 42% of the loans transferred to PSALM from its precursor-company National Power Corporation (NPC) had been denominated in US dollar, hence, the fluctuation in foreign exchange rates will have extensive impact on its financial obligations.

“The implication of the changes in foreign exchange rates have significant bearing to PSALM, given how the company’s financial structure is denominated mostly in foreign currency. This makes the company very vulnerable to varying exchange rates,” the state-run firm noted.

As of April 30 this year, the US dollar-denominated outstanding debts of PSALM hovered at P123.593 billion; while the obligations in Philippine peso amounted to P168.892 billion.

It is also apparent that in PSALM’s calculations, it was still using a lower foreign exchange rate reference of P57.6970 vis-à-vis the US dollar that had been anchored on the guiding rate of the Bangko Sentral ng Pilipinas.

It is worth noting that in recent weeks, the local currency had depreciated further to more than P58 versus the greenback, thus, that would bring added knock on the state-run firm’s debt level in the succeeding months.

Following its successful divestment of the Casecnan hydropower plant last year, PSALM is still lining up the privatization of its remaining assets -- including the Caliraya-Botocan-Kalayaan (CBK) hydro facility, the IPP contract for the Mindanao coal plant and the Agus-Pulangui hydropower complex in Mindanao.