Without yet an approval for government guarantee cover for its proposed borrowings up until this point, the Power Sector Assets and Liabilities Management Corporation (PSALM) is seen facing hurdles to secure loans to settle some P20 billion worth of loans failing due this year.

Company insiders said “we are eyeing to secure an approval from Malacañang this week, so the Department of Finance (DoF) can finally extend approval” on planned borrowings.

“We are expecting P20 billion proceeds from the issue, but with an option to raise it to P30 billion,” the source noted; adding that they would need to secure cash by April this year.

“We have secured favorable endorsement from DoF and the Monetary Board, so the next regulatory approval we will have to go through is Malacanang,” a company executive noted.

The source added that both Development Bank of the Philippines and Land Bank of the Philippines already forwarded facility offers; but “we have not acted on them yet, pending the regulatory approvals.”

Sources from the banking industry disclosed that PSALM “has been frantically calling big banks for loans, but they are not very keen to lend without a guarantee.”

The company announced two months ago its planned P20 billion bond offering, noting that it was then taking “advantage of domestic market liquidity and the low interest rate environment.”

PSALM simply noted that “the proceeds shall be used to augment its working capital requirements/liability management program,” albeit qualifying that the entire process will still need to go through regulatory approvals.

While confronting such financial hurdles though, PSALM announced plans of fast-tracking the privatization of remaining generation assets of the National Power Corporation.

On March 17, the company issued invitation to bid (ITB) for the 150 megawatt Bacon-Manito geothermal plants, which it scheduled on the auction block May 5 this year.

“Prospective bidders have until 26 March 2010 to submit a Letter of Interest, which is a prerequisite for the bidding,” the company noted. Among the early birds as to expressing interest on the asset are Energy Development Corporation (EDC) of the Lopez group and San Miguel Energy Corporation.

Going back to PSALM’s borrowings, the company’s fresh round of bond offering has been expected to further jack up its loan procurement; rounding up to $2.64 billion since last year.

PSALM initially completed an offer at the international bond market for $1.0 billion issue; and this was followed by another $1.2 billion; to cover debt settlements maturing by 2019 and 2024.

It was noted that while its predecessor-company NPC has government guarantee privilege under its Charter, such was not automatically granted to PSALM; even with the latter’s transfer of liabilities.