THE Power Sector Assets and Liabilities Management Corp. (Psalm) assured that all the income generated from the privatization of the assets of the National Power Corporation are "intact and are not missing."

Psalm said "these proceeds have been used to service the financial obligations of National Power as stipulated in the Electric Power Industry Reform Act (Epira).

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Psalm pointed out that of the US$10.653 billion that it had generated so far from the privatization of Napocor assets, only US$4.65 billion has been collected as of July 31 2010, with the rest of the amount due in deferred payments.

Of the US$4.65-billion collection, Psalm used US$4.46 billion to pay off National Power's financial obligations.

Psalm reported that since 2004, when its privatization program had commenced, total National Power obligations had continuously gone down from US$ 19.49 billion to where it now stands at US$16.36 billion.

It clarified that while Napocor's debt stood at US$16.5 billion before the enactment of the Epira in 2001, the figure ballooned to as high as US$22.9 billion in 2003.

It was because of the costs arising from the new Independent Power Producer (IPP) contracts amounted to US$1.75 billion.

These contracts include San Roque, Kalayaan Units 3 and 4, Mindanao Coal Plant, Bakun and Ilijan. The commissioning of these IPPs was necessary at that time to cover the shortfall in generation supply.

The issuance of a presidential directive in 2002 to peg the Purchase Power Cost Adjustment to P0.40 per kilowatt-hour (kWh) contributed to the decline of Napocor's fiscal standing.

Aggravating the fiscal woes was the implementation of the P0.30 per kWh mandated rate reduction for residential customers nationwide which translated to a P2.5-billion reduction in National Power's revenues per year.

While it is true that the government absorbed P200 billion in debts in 2004, National Power still ended up losing an estimated US$350 million in terms of foreign exchange from the debt absorption.

At the same time, PSALM also clarified that because of the timing variance between the cash inflows from the privatization proceeds and the debt obligations, it had to resort to borrowings to refinance maturing obligations.

Psalm incurred borrowings amounting to US$2.2 billion in 2009 and P30 billion in 2010 to address National Power's debts that would mature in 2009 and 2010. The objective of the loans is to manage National Power's liquidity risk by ensuring the availability of funds.

From 2009 to 2011, Psalm is scheduled to settle a total amount of US$ 4.5 billion in maturing obligations, including interest. (MSN/Sunnex)