Pampanga electric coop settles P1.1 B loan with PSALM

MANILA, Philippines - Pampanga II Electric Cooperative Inc. (PELCO II) has settled its outstanding obligation with state-run the Power Sector Assets and Liabilities Management Corp. (PSALM) amounting to nearly P1.1 billion.

In a statement, PSALM said it received last Sept. 30 the full balance of the restructured obligation of PELCO II amounting to P1.095 billion.

“The amount of prepayment sets the record as the biggest ever received by the government power firm from any electric cooperative (EC) for its outstanding obligation. This will redound to the reduction of stranded debts of National Power Corp.” PSALM president and CEO Lourdes S. Alzona said.

PSALM said PELCO II is the first EC to succeed under the Investment and Management Contract (IMC), a program of the National Electrification Administration (NEA).

Backed by IMC and a loan from the Philippine National Bank (PNB), PELCO II was able to prepay its restructured account with PSALM, which originally amounted to P1.43 billion to be amortized within a period of 10 years beginning October 2010.

“This is a historical event for PSALM because PELCO II’s prepayment is the first full prepayment to us,” said PSALM Treasury Department manager Manuel Marcos M. Villalon II.

“It encourages ailing electric cooperatives to consider IMC as an option to address financial concerns. Hopefully, this can be a project that the other electric cooperatives will also engage in,” he added.

In October 2010, the PSALM board approved the restructuring of PELCO II’s unpaid power obligations.

PELCO II, which distributes of electricity to the city of Mabalacat and towns of Guagua, Bacolor, Sta. Rita, Lubao, and Porac, is currently under a 20-year IMC with the Comstech Integration Alliance Inc. (Comstech) and the Manila Electric Co. (Meralco), the latter acting as technical advisor to Comstech.

Based on the IMC, the investor-manager will settle PELCO II’s debts with the NEA and its power supplier.

Meralco has also been tapped to upgrade the power distribution system of PELCO II.