The state-run Power Sector Assets and Liabilities Management Corp. (PSALM) is studying the viability of using the Malampaya funds to help pay the power sector’s debt amounting to as much as P1 trillion.
In an interview with the Inquirer, PSALM president and CEO Emmanuel R. Ledesma Jr. said this was one of the options being eyed by PSALM, which has been struggling to manage the energy sector’s debt that amounted to P696.5 billion as of end-2011.
“Commercially, [tapping the Malampaya funds] may sound reasonable and practical. However, PSALM will have to look into any legal constraints as well as any political considerations bearing in mind that the Malampaya royalty fees include fees that are due to the local government units where the resource is located,” Ledesma told the Inquirer.
According to Ledesma, the government has assets such as unsold plants that can be used to pay maturing obligations.
“However, there is a mismatch between the maturity profile of the financial obligations and the schedule of collection of the privatization proceeds, coupled with the apparent losses to be incurred by the continued operations of the remaining unsold expensive government-owned [power assets] and [contracted capacities from] independent power producers,” Ledesma admitted.
“This condition will continuously compel PSALM to obtain refinancing for the servicing of outstanding financial obligations,” he added.