Power Sector Assets and Liabilities Management Corp., the agency in charge of privatizing state power assets, plans to borrow as much as $1 billion as early as next quarter to bolster working capital and pay maturing debt, an official said.

PSALM, which also manages the finances of state utility National Power Corp., may sell bonds or borrow from banks, Capital Markets manager Ferdinand Florendo said yesterday.

“The earlier we do it, the better for us,” Florendo said in an interview. “What’s holding us up really is the documentation.”

About $1 billion of Napocor’s $6.2 billion in debt will mature this year, and $1.7 billion in 2010. The utility also needs funds to operate power plants and pay private companies that sell it electricity. PSALM canceled presentations to potential investors earlier this month, citing poor market conditions.

“The board has given us flexibility to do either peso or dollar, global bond or loan,” Florendo said. “That is still being discussed internally. We have received a number of proposals.”

The fund raising would be the first in three years for Napocor. The country’s biggest power utility likely posted a loss in 2008, Florendo said, ending three consecutive years of profit. Foreign exchange losses as the peso weakened and delays in power price adjustments combined with lost income from sold power plants contributed to the result.

In 2006, Napocor raised $500 million from 10-year fixed-rate notes and P10 billion from the sale of five- and 10-year bonds, data compiled by Bloomberg show.

PSALM is also in talks with banks to hedge Napocor’s monthly US dollar requirements of between $50 million and $100 million, Florendo said.

“Napocor has always tapped the spot market” to purchase dollars, Florendo said. “In times when the peso was appreciating, that was okay. But now, we should start hedging its requirements,” Florendo added.

Separately, the agency plans to hold a new sale of the 600-megawatt coal plant at Calaca in Batangas province, after a failed transaction with GDF Suez SA, PSALM spokesman Conrad Tolentino said. The sale could take place as early as the next quarter, Tolentino said.

The plant, one of the biggest the utility offered for sale, was won by a unit of Suez with a bid of $787 million in a 2007 auction. In January, Suez terminated its purchase of the facility citing the plant’s deteriorating condition.

Tolentino said the agency might conduct a negotiated sale. That involves requiring interested parties to submit their technical and financial bids, then negotiating with the highest bidder in case none of the parties meet the government’s reserve price. At least six potential buyers have expressed interest in the plant. Bloomberg