PSALM aims to raise P85B for 2012 expenses

State-run Power Sector Assets and Liabilities Management Corp. (PSALM) plans to raise P85 billion early next year to service its financing and operational requirements for 2012.

PSALM president and CEO Emmanuel R. Ledesma Jr. said the plan was to raise the funds through either an on-lending arrangement with the government or issuance of regular peso notes.

Of the P85 billion, PSALM intends to use P28.7 billion for debt servicing, P52.3 billion for operational expenditures, and P4.3 billion for the “carryover deficit from 2011 operations.”

Ledesma said the amount was determined on the assumption that PSALM would be able to start collecting universal charges for stranded debts (UC-SD) and stranded contract costs (UC-SCC) next year.

“It assumed a 70-percent collection efficiency of UC-SD and UC-SCC starting the third quarter of 2012,” he said.

It can be recalled that PSALM had submitted a petition to the Energy Regulatory Commission, seeking to recover P139 billion worth of stranded debts and contracts costs.

Stranded debt refers to the financial obligation of state firm National Power Corp. (Napocor) that was not covered by the proceeds from the sale of Napocor’s power assets.

The estimated stranded cost of an eligible contract is calculated every year as the difference between the contractual payment obligation and the revenue earned from the sale of the contracted energy.

Ledesma said PSALM was compelled to secure additional funding to fulfill its mandate to operate and maintain the plants in its portfolio. PSALM was also mandated to clear the books of cash-strapped Napocor.

As of end-2010, Napocor’s total liabilities stood at $15.8 billion.

Also, the deferment of the asset privatization program—which would have been a source of funds for PSALM—made it necessary for the agency to raise funds, Ledesma said.

PSALM plans to resume the sale of the remaining government-owned power assets and contracted capacities by March next year, starting with the bidding for four power barges.

In a related development, Ledesma said it was still in talks with the country’s transmission operator, National Grid Corp. of the Philippines, for the possible sale of PSALM’s receivables.