PSALM urged to secure loans locally

The Department of Finance wants the Power Sector Assets and Liabilities Management Corp. (PSALM) to borrow funds locally when addressing any cash shortfall.

Finance Undersecretary Rosalia V. de Leon told reporters that the preferred option would shield PSALM against foreign currency shocks and the resulting increase in borrowing costs, while helping stem the peso’s appreciation.

The manner of raising funds “will depend on (PSALM’s) needs. We’ll have to see the pricing situation for onshore borrowings,” she said, noting that there is ample liquidity in the domestic financial market.

She said that, in particular, there are some P2 billion to P3 billion in idle funds parked with the central bank.

Earlier this month, PSALM president and chief executive Emmanuel R. Ledesma Jr. said the company would sell six government power plants and two independent power producer administrator (Ippa) contracts this year to plug an expected P85-billion cash shortfall.

The CEO explained that PSALM’s planned deficit spending in 2012 would cover debt servicing, operational expenses and IPP obligations. PSALM this year has to settle some $1.7 billion in principal, interest and IPP lease obligations.