PSALM seeks P23B from gov’t to cover shortfall

State-run Power Sector Assets and Liabilities Management Corp. (PSALM) has received only P6.44 billion as of May this year, out of the P30 billion in advances it expected from the government to cover a portion of its projected funding shortfall.

But according to PSALM president and CEO Emmanuel R. Ledesma Jr., the state power firm expects the rest of the P30 billion to be released by the end of August, allowing it to settle its maturing obligations this year.

The P30 billion represents the first tranche under the medium-term financing program of PSALM, which needs a total of P85 billion to plug the expected shortfall.

Ledesma said in an interview that the entire shortfall would be “covered by the national government as part of its onlending program.”

The actual operations of PSALM, however, will still be covered by the government firm’s revenues from the operation of the remaining power generation assets and contracted capacities, as well as proceeds from its privatization effort, he further explained.

The government earlier told PSALM to raise its funding requirements, not by tapping loan facilities or issuing debt notes, but by “onlending,” which it said “would likely come out cheaper in terms of interest rates and charges.”

As of end-2011, the outstanding financial obligations of PSALM stood at $15.58 billion.

PSALM has found it difficult to reduce its debt because the state-run National Power Corp. still manages and operates the remaining government-owned power plants and contracted capacities from independent power producers. These facilities and contracts have yet to be privatized and turned over to the private sector.

To cut its debt, PSALM has implemented a liability management program and is now trying to recover at least P140 billion worth of contract costs from power consumers through the imposition of a universal charge.