PSALM incurs additional P40-B cost on forex losses, rising rates

STATE-LED Power Sector Assets and Liabilities Management Corp. (PSALM) placed at nearly P40 billion the additional cost it incurred in 2018 from its debts due to the depreciation of the peso and the rise in interest rate, a company official said.
“It’s P8 billion for every peso [depreciation],” Lourdes S. Alzona, PSALM vice-president for finance, adding that the local currency weakened by P4 to a dollar last year based on the company’s assessment.
“Mga P30 billion ‘yung forex loss namin (Our foreign exchange loss was about P30 billion),” she told reporters after a hearing at the House of Representatives on Tuesday.
She described last year’s peso depreciation as way bigger than the previous year’s — from P49.9 to P54. She said the agency was expecting a big reduction in its interest payments, but the peso depreciation had negated the decrease.
PSALM is the agency mandated to liquidate the financial obligations of the National Power Corp. (Napocor), including the latter’s stranded debts and stranded contract costs, that the government-owned and -controlled corporation incurred when it built power generation projects during the energy crisis in the 1990s.
Republic Act No. 9136, or the Electric Power Industry Reform Act (EPIRA), required PSALM to implement a liability management program to cut Napocor’s financial obligations that resulted from its past domestic and foreign borrowings, obligations under independent power producer (IPP) contracts, and other debts.
At the time of EPIRA’s passage in 2001, PSALM assumed all of Napocor’s liabilities and obligations, which at that time amounted to P830.7 billion.
Aside from the forex losses, Ms. Alzona said PSALM was also hit by the rise in interest rate last year, which she placed at an average of 6.5% from around 5% a year earlier.
She said the rate increase translated into at least P7 billion in additional cost for the agency.
“[That’s] nearly P40 billion [in total] na wala kaming kalaban-laban (that is beyond our control),” Ms. Alzona said.
She said as of end-2018, PSALM was able to cut its total obligations to an estimated P449.49 billion, of which P265.21 billion were debts and P184.73 billion in IPP lease obligations. — Victor V. Saulon