PSALM to borrow next year

MANILA, Philippines - The Power Sector Assets and Liabilities Management Corp. (PSALM) will likely source the bulk of its borrowings locally next year, PSALM vice chairman and Energy Secretary Jose Rene Almendras said.

“With the successful launch of the peso bonds, I will urge PSALM to consider next year’s fund-raising in pesos,” he said.

The Department of Finance (DOF) earlier said PSALM would likely avoid the debt market this year. Finance Undersecretary Jeremias N. Paul said they believe that PSALM’s financial requirement for 2010 has been fully covered.

He said they do not expect any prepayment this year unless opportunities come along the way. “I don’t think there would be pre-payment, it may be more on liability management,” he said. “But if there is an opportunity, why not.”

PSALM’s financial position, particularly its borrowing scheme, is now under close scrutiny by the DOE.

PSALM, an entity created under Republic Act 9136 or the Electric Power Industry Reform Act (EPIRA), manages the finances and privatization of the stateowned National Power Corp. (Napocor).

Paul said he also sees no problem in accounting for all the privatization proceeds of the National Power Corp. (Napocor).

While privatization proceeds keep coming in, it would be noted that PSALM is also on a borrowing spree. Earlier this year, it was allowed to raise up to P50 billion through domestic bonds and plans to raise another $1 billion for refinancing of debts for 2011.

As of end-December 2009, Napocor’s outstanding debt stood at $16.5 billion, 40 percent of which is set to mature starting this year until 2014. For 2010, Napocor has around $3 billion worth of maturing loans.

Based on PSALM’s application, it would need to recover P470.8 billion worth of Napocor’s stranded debts and P22 billion in stranded contract costs.