PSALM plans to raise P85B

State-run Power Sector Assets and Liabilities Management Corp. (PSALM) plans to raise up to P85 billion starting April to service financing and operational requirements for 2012.

At the sidelines of the Euromoney Conference Wednesday, PSALM president and CEO Emmanuel R. Ledesma Jr. said the company was planning to raise funds through an on-lending arrangement with the government as this would likely come out cheaper due to lower interest rates and charges.

“We are still OK (in terms of funding) until May but we should already start exploring our funding options before that month. We have not yet finalized how to go about the fundraising, whether it is through the Department of Finance or PSALM itself. Personally, I think it is more likely it would be DOF,” Ledesma said.

“DOF will be able to raise cheaper funds. With the amount involved, 25 or 50 basis points make a big difference,” he said.

Ledesma said the board of PSALM would meet next week to start determining the method and facility to be used in raising this year’s funding requirements.

A portion of the P85-billion financial requirement—which assumes that PSALM will still not be able to collect universal charges for stranded debts and contract costs—will be used to pay maturing debts while the rest will be earmarked for the operation and maintenance of its power plants.

PSALM earlier submitted a petition before the Energy Regulatory Commission, seeking the recovery of P139 billion worth of stranded debts and contracts costs. This is already lower than the amount in its previous petitions, which was placed at more than P500 billion.

Stranded debt refers to the obligations of National Power Corp. 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.