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PIA Press Release
2007/12/07

PSALM, NPC, Transco discuss financial operations with IMF

by PIA-MMIO

Manila (7 December) -- "The privatization of the government's power assets is on track and we are optimizing the use of the privatization proceeds to reap maximum benefits for the Filipino people."

Thus declared Mr. Jose C. Ibazeta, President and CEO of the Power Sector Assets and Liabilities Management Corporation (PSALM), at a meeting with representatives from the International Monetary Fund (IMF) on Wednesday, 5 December, to discuss the power sector financial operations, particularly the outlook for 2007 and projections and plans for 2008. PSALM was joined at the meeting by representatives of the National Power Corporation (NPC) and the National Transmission Corporation (TransCo).

"We informed the IMF regarding the status of our privatization efforts and how this will affect our financial projections for 2008," Mr. Ibazeta said.

As of November 2007, PSALM has successfully bid out about 43% of the total generating capacities in Luzon and Visayas vis--vis the 70% requirement for open access and retail competition. This includes the 600 MW Masinloc coal-fired power plant, 600 MW Calaca coal-fired power plant and the 175 MW Ambuklao-Binga Hydroelectric Power Plants, auctioned off in July, October and November, respectively.

"Our commitment to meet the 70% privatization target for the generating assets is undiminished even if there is a proposal to amend the EPIRA to lower the threshold from 70% to 50%," Mr. Ibazeta informed the IMF party.

PSALM also expects to finalize its review of the appropriate structure for the selection of Independent Power Producers Administrators (IPPAs). "The bidding for the IPPAs is both complex and unprecedented, with no international experience to draw upon. However, we are confident that we will be able to issue the transaction documents for the bidding of the Luzon IPPA by the first quarter of 2008," Mr. Ibazeta said.

Under the Electric Power Industry Reform Act (EPIRA), the privatization of 70% the total generating capacities of NPC generation plants and the transfer of control and management of 70% of the contracted output of NPC IPPs to IPPAs are pre-requisites for open access and retail competition, which is seen to lead to cheaper electricity for consumers.

Mr. Ibazeta also updated the IMF team about the privatization proceeds, which include the full payment on the Magat Hydroelectric Plant given by SN Aboitiz Power last October. "We will maximize the use of the privatization proceeds by pre-paying NPC's debts," Mr. Ibazeta said. PSALM has programmed to pre-pay up to US$ 1 billion in the near term, which is about 14% of NPC's loan obligations. This is part of the amount earlier approved by the PSALM Board for prepayment.

The IMF team, on its part, lauded the efforts of PSALM in privatizing the government's generation assets. The IMF conducts an annual review of 14 Monitored Non-Financial Government Corporations (MNFGCs) which include PSALM, NPC and TransCo. The Department of Finance consolidates and monitors the financial performance of the 14 MNFGCs as part of the Consolidated Public Sector Financial Report. (PIA-MMIO) [top]

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