Gov’t plans to tap Malampaya funds to pay 1245-B power debts

The Duterte administration is resurrecting plans to utilize the Malampaya fund to partly wipe out the monstrous R245 billion worth of estimated stranded liabilities of the power sector that had been placed under the charge of the Power Sector Assets and Liabilities Management Corporation.

The proposal reportedly came up in separate briefings undertaken by the state-run firm to both the Departments of Energy and Finance, centering on the financial state and liability management concerns for the restructured electricity sector.

According to PSALM, it’s no less than Finance Secretary Carlos G. Dominguez who sounded off that there might be a way to tap into the Malampaya fund, which the department deems to be a “sleeping fund” because it has not been earning that much in the bank.

It was gathered that the Malampaya fund has a balance of about R120 billion (in ready cash), part of which could help pare the enormous residual liabilities of the financially-vexed PSALM.

DOE Spokesperson Wimpy Fuentebella has qualified that the proposed re-alignment of the State revenues from the Malampaya project to expunge PSALM’s stranded debts “will have to go through the approval of Congress.”

At this stage, he said “it is still too early for (the proposal) to be carried” in mitigating the immediate debt settlements of PSALM.

PSALM Officer-in-Charge Lourdes S. Alzona said the finance department sounded off that it wants the DOE to come up with a study and lay down the legal basis on the use of Malampaya revenues for the power sector’s debt retirements.

If PSALM will be funneled with such funding from the Malampaya kitty, it can substantially reduce its stranded contract costs and stranded debts – which at present, had been estimated reaching R245 billion until the end of its corporate life.

Alzona noted that if there would be allotment to PSALM from the gas project’s cash hoard, this can already cover debt payment requirements in the next three years – and this could prompt them to withdraw their pending applications for R105 billion worth of universal charge (UC) cost recoveries.

The only remaining burden for PSALM then would be to maximize the proceeds of upcoming privatization of assets so it can fully settle eventual debts falling due as well its other outstanding obligations.

“If we are given the Malampaya fund, it will already cover our bullet debt payments for 2017, 2018 and 2019… with that, we are confident that we can achieve the ‘zero debt’ directive of Secretary Dominguez,” Alzona stressed.

The Malampaya fund apparently is seen by the Duterte administration as the “saving grace” to finally spare the Filipino consumers from being pounded with massive UC pass-on in their electric bills.