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PIA Press Release

PSALM set to pre-pay NPC debts

Manila (4 December) -- Thanks to encouraging proceeds from the privatization of National Power Corporation (NPC) power plants, the Power Sector Assets and Liabilities Management Corporation (PSALM) is now programmed to pre-pay a number of NPC's debts.

"This is in accordance with PSALM's mandate under the Electric Power Industry Reform Act of 2001 (EPIRA). The programmed pre-payment will likewise alleviate the government's debt burden, especially those loans denominated in Japanese Yen," PSALM Manager for Capital Markets and Risk Management Ferdinand George Florendo explained.

"PSALM is prioritizing the pre-payment of these loans because of the continuous strengthening of the Yen. While the Peso has gained against the US dollar in the last two years, it has depreciated 6.68% against the Yen this year. PSALM Management is therefore keen on controlling this Yen exposure. We hope to get all approvals soon," Mr. Florendo added.

PSALM is set to assist the NPC in the approval of its budget at the Senate today, December 3. Included in the report of NPC are the privatization proceeds and its joint plan with PSALM to liquidate and pre-pay debts.

Under the EPIRA, all proceeds the government gets from the sale and privatization of NPC assets will go to the payment of NPC's US$7.2 billion in debts.

"The continued success of the power privatization program, including the bidding of the National Transmission Corporation (TransCo) concession is critical," Mr. Florendo added, "because the proceeds likewise determine the amount of Universal Charges to be imposed on the consumers as provided for under EPIRA. Accordingly, the more successful we are in privatization, the less the charges will be to the people."

"Bottom-line, the privatization proceeds will not only improve NPC's finances, but will also improve the country's standing in the international financial community," Mr. Florendo concluded. (PIA) [top]

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