Transfer of Napocor assets to PSALM expected to gain creditors’ approval

The transfer of the assets of the National Power Corp. (Napocor) to the Power Sector Assets and Liabilities Management Corp. (PSALM) is expected to gain the approval of the former’s creditors not later than June this year.

"We are giving ourselves enough leeway. We believe we can finish it within the first half of the year. Talks with multilateral creditors are becoming clearer," PSALM vice president for assets disposal Froilan Tampinco said.

Tampinco said they are optimistic that they could meet the target or do the transfer earlier than expected.

"This is just a target and if we could carry out the transfer of the assets earlier than June, it would be much better," he said.

He said they have already completed the negotiating phase and is now working out various strategies to effect the transfer.

"We have complied with the requirements of the creditors. We are currently firming up strategies," he said

Tampinco said they were not able to close their contracts with the buyers of Napocor assets as they have not yet officially transferred the power firm’s assets to PSALM.

"We are not able to close our contract with Hydro Electric Development Corp. for the sale of Talomo power plant. We are not also getting any payment until such time that the contract is closed," he said.

In the meantime, PSALM is including a clause in its sale contracts for Napocor’s generating assets to ensure buyers of the transfer of the assets within 270 days.

PSALM was created by virtue of the Electric Power Industry Reform Act (EPIRA, which tasked PSALM to take ownership of all existing generation assets, liabilities, independent power producers (IPP) contracts, real estate and all other disposable assets of Napocor.

Last year, PSALM was able to secure approval from commercial bank creditors for the transfer. Only the multilateral lenders like the Asian Development Bank (ADB), World Bank and Japan Bank for International Cooperation (JBIC) will need to give their go-signal to complete the transfer of the assets.

The ADB earlier said the transfer of the assets is a crucial part in the privatization progress of the state-run power firm. "Part of the privatization process is the transfer of the Napocor assets and liabilities to PSALM. That is part of the progress we need to see before we give the partial credit guarantee,"ADB country director Thomas Crouch said.

He said they also want to see the transfer of the transmission function of Napocor to the National Transmission Corp. (Transco).

"We would want to see concrete progress on the transmission function transferred from Napocor to Transco," he said.

Both PSALM and Transco were created under the EPIRA as part of the restructuring and privatization of the power sector. Transco is a spin off company that will absorb the transmission function of Napocor while PSALM will assume all the assets and liabilities of Napocor. Transco and Napocor will operate under the supervision of PSALM