MANILA, Philippines - For its planned borrowings of P85 billion this year, the Power Sector Assets and Liabilities Management Corporation (PSALM) has indicated that P14 billion will be used to refinance outstanding obligations.
In the company's list of loans, it was culled that two major payments are due to the Bureau of Treasury this year, amounting to P11 billion and P3 billion, respectively.
"We will refinance the P3.0 billion and P11-billion loans. The plan is to the extent that the privatization proceeds are less than the maturities, PSALM will have to refinance such deficits to pay off the maturities," PSALM president Emmanuel R. Ledesma Jr. said.
These amounts were previously granted to the National Power Corporation for its general funding requirements at fixed interest rates of 9.875 percent for the P11 billion and 10.375 percent for the P3.0 billion. After privatization, all of NPC's loans and other obligations were transferred to PSALM.
The other loans due to mature this year are those with the Overseas Economic Cooperation Fund (OECF) of Japan amounting to P223 million and that of BDO for P50 million, but Ledesma emphasized that these were already settled in advance.
The PSALM chief executive told media that options for the planned loan procurement are still being explored, but it will certainly be the Department of Finance (DOF) which will do the borrowings on behalf of the company's funding needs.
He noted that while cash infusion through offshore bonds is being considered, there are still key parameters being weighed, such as the denomination and the timing of the issue.
Ledesma emphasized that the company's borrowings this year will be utilized both for refinancing maturing debts as well as to fund its operations.
The amount, he said, is still based on prospects that the company would not be able to secure regulatory approval on its filing for P140 billion worth of universal charge (UC) recoveries.
However, with the recent approval of the Energy Regulatory Commission (ERC) on its application for generation rate adjustment mechanism (GRAM) and incremental currency exchange rate adjustment (IECRA) deferred costs, Ledesma conceded that this will help trim down the company's cash deficit. Its impact on the proposed borrowings though is still being assessed.
"Any increase in GRAM and ICERA will improve PSALM's cash flow. This should lessen our operational deficit," he said.
The ERC has granted a P0.6904 per kilowatt-hour (kWh) hike in NPC charges for the Luzon grid; P0.6060 per kWh for Visayas; and P0.0442 per kWh for Mindanao. (MMV)