by Myla Iglesias

The Power Assets and Liabilities Management Corp. will pay down National Power Corp.’s entire debt stock with the $13 billion that is expected from the privatization of independent power producers contracts which starts this August.

"Everything we get is for debt servicing of Napocor," Jose Ibazeta, president of Psalm, said.

Napocor has total debts of $ 7.2 billion. Of the total, Psalm is prepaying $2.4 billion ahead of their maturities in 2009, 2010 and 2011.

Ibazeta said Psalm has already pre-terminated $120 million last year, and $300 million more will be prepaid this year.

Because of the expected proceeds from the asset sales, Ibazeta said Psalm has no plans to borrow money for Napocor this year.

At the end of 2007, the Psalm has raised a total of $2.7 billion from the auctions of 12 power plants.

Ibazeta said Psalm expects to collect a total of $1.9 billion this year. He said it has already raised $930 million from AES Corp.’s full payment for the Masinloc coal-fired plant and $500 million will come from Suez-Tractebel, the winning bidder of Calaca.

However, Ibazeta said Psalm, the government agency tasked to manage the assets and liabilities of Napocor, is yet to finalize how to bid out the IPP contracts to buyers.

He said the agency may come out with its decision by the end of the month or in "two

week’s time."

Ibazeta said Psalm is studying two business models, whether to transfer the fuel procurement functions of Napocor to the winning bidder or the management of the energy output of the IPPs then sell it to the spot market.

The Energy Power Industry Reform Act (Epira) has mandated the privatization of the NPC-IPP contracts in Luzon and Visayas. This will pave the way for the open access and retail competition that is seen to reduce the prices of electricity.

Napocor has 15 IPP power plants that include the largest 1,200MW Ilijan natural gas-fired power plant; 700 MW Pagbilao coal-fired power plant; 1,000-MW Sual coal-fired power plant; and 345MW San Roque hydroelectric power plant.

The others are the 70MW Bakun hydroelectric power plant, 18MW Hedcor hydroelectric power plant, 754MW CBK power plant, PNOC-EDC geothermal power plant (Leyte A & B), 630MW Malaya thermal power plant, Casecnan, Subic DPP, Baung diesel power plant, Limay and Salcon.

The power plants will be sold to IPP administrators or qualified independent entities appointed by Psalm to take over the assets through public bidding.

The IPPAs will manage the contracted energy output of Napocor’s IPP contracts, will be responsible in bidding the IPP energy output to the wholesale electricity spot market (Wesm) and negotiate bilateral contracts with consumers.