PSALM eyes $500-M notes

MANILA, Philippines - The state-run Power Sector Assets and Liabilities Management Corp. (PSALM) is eyeing a $500-million notes issue to refinance its maturing debts, a top company official said.

PSALM president and chief executive officer Emmanuel Ledesma Jr. said the debt issue was necessary as the agency would be incurring a deficit of P85 billion this year.

“We are looking to raise funds and finance operations through on-lending with the National Government, borrow from a consortium of lenders, or to issue debt notes,” Ledesma said.

Ledesma said other options to raise funds to plug the deficit and address maturing debts include privatization of remaining plants as well as the appointment of the independent power producer administrators (IPPAs); liquidation of privatization receivables from National Grid Corporation of the Philippines (NGCP); and acceleration of the sale of PSALM’s non-power assets (i.e. real estate, paintings, among others).

Already up for privatization is the 650-megawatt (MW) Malaya thermal power plant, Power Barges 101 to 104, and other decommissioned power facilities this year.

Next in line will be the privatization of the contracted capacity of the 640-MW Unified Leyte geothermal power plants and the 140-MW Casecnan multipurpose hydroelectric plant in Luzon.

The Malaya plant’s contracted capacity was supposed to be bid out on June 16, 2010 but the bidding was declared a failure after only First Gen Corp. of the Lopez Group showed up as the sole bidder.

Power Barge 101, 102, 103 and 104 have a maximum capacity of 32 MW each. PB 101 and PB 102 were commissioned in 1981 are currently moored at Brgy. Obrero, Iloilo City while PB 103 and 104, which were commissioned in 1985, are moored at Botongon, Estancia, Iloilo and at the Holcim Compound, Ilang, Davao City, respectively.

PSALM has outstanding receivables from NGCP amounting to $2.85 billion. NGCP, under its concession agreement with PSALM, is supposed to pay a semi-annual concession fee for 25 years.

Ledesma earlier said they are still hoping that the Energy Regulatory Commission (ERC) will approve their petition to recover from the universal charge the stranded debts and stranded contract costs of Napocor as mandated under the Electric Power Industry Reform Act of 2001.

PSALM filed on June 28, 2011 its universal application for stranded debt and stranded contract costs at P0.03 per kilowatthour (kwh) and P0.36 per kwh, respectively.

PSALM proposed to recover the stranded contract cost for a period of 15 years to bring down the universal charge for stranded contract cost to P0.06 per kwh, or P5 billion.