PSALM repays P12.3-B debt to gov’t

MANILA, Philippines - The Power Sector Assets and Liabilities Management Corp. (PSALM), the government agency tasked to manage state-owned power assets, said it has repaid P12.3 billion in debts to the National Government.

PSALM said as of end-July, it has already paid P12.3 billion owed to state coffers, reversing the P8.4 billion in advances made by the National Government in the same period a year ago.

The Aquino administration has opted to re-lend to PSALM instead of authorizing it to tap the debt market directly. This enables the government to better manage the debts of PSALM.

Despite the repayment, PSALM would still need to tap state coffers for its refinancing and overall funding requirements in the remaining period of the year, it said.

PSALM is expected to borrow in the fourth quarter roughly P20 billion, data from the Bureau of the Treasury showed.

However, this is significantly lower than the original amount of P69 billion which the government set aside for re-lending to PSALM this year, on the back of PSALM’s improving financial situation.

Last year, the government raised $500 million from the local debt market, proceeds of which went to PSALM.

PSALM has not tapped the debt market again as the Aquino administration has made it a policy to borrow for cash-strapped agencies such as PSALM to better monitor their finances.

The state corporation had its maiden domestic issuance in 2010, raising P30 billion from the sale of five- and seven-year fixed rate bonds to local investors.

The agency has been trying to sell power assets to pay off debts. On the auction block are four power barges, which PSALM is eyeing to bid out in October.

As of September 2012, PSALM’s total debt and lease obligations to independent power producers have reached P640 billion, consisting of P328 billion in debt and P311 billion in lease obligations.