DoF expects P1.45/kWh hike for Napocor rate
Friday, December 10, 2004
By LEE C. CHIPONGIAN
The Department of Finance is expecting at least a P1.45 per kilowatthour tariff increase for National Power Corp., which would generate only P50 billion of the expected P80 billion to P100 billion for the cash-impaired power firm.
The Energy Regulatory Commission previously granted Napocor half or 98 centavos of the P1.87/kWh proposal to adjust its rates. This only generated about P30 billion for Napocor, which is not enough to wipe out its operational or financing deficit.
DoF Secretary Juanita D. Amatong said she has been informed that ERC might adjust rates by only 40 to 45 centavos next quarter instead of the promised P98 centavos, which is the other half of the full P1.87 proposed by Napocor and PSALM. "We might only get the P1.40/kWh increase and if that is so, then we will settle for this amount," Amatong said.
This means since Napocor will not be able to source cash from the tariff increase, the government would have to borrow an additional P50 billion for Napocor in 2005. For 2004 the National Government borrowed $1.5 billion for Napocor. For next year, this is estimated to about $1.8 billion or about P100 billion.
DoF documents show that Napocor is expected to incur losses worth P82.47 billion this year. The projected losses for the country’s biggest debt burden are considerably lower from last year’s P100 billion, which exceeded original estimate of P65-70 billion.
The weaker peso, high cost of foreign borrowings and the continued rise in global fuel prices as well as problems with power distributors pushed Napocor losses higher. The peso is expected to close the year at P56 to the US dollar.
Amatong said earlier that fiscal deficit target is higher in 2005 to P193.35 billion from original target of P184.53 billion. "This is really because of Napocor. We have assumed P200 billion worth of its obligations."
However, the DoF chief is confident the government will fast-track Napocor’s privatization efforts next year, which is estimated to save the state P40 billion a year and would improve its budget deficit.
Industry analysts said the power utility is likely to incur a bigger net loss for 2004 based on its dismal financial performance in the previous year.
The power firm reported a net loss of P100 billion in 2003 significantly higher than its net loss of P33.7 billion in 2002.
Napocor’s losing streak has punched deep holes in the DoF coffers and it is likely to continue. Its string of losses dates back to 1998 when the Asian financial crisis resulted in poor electricity sales. It also led to higher operating and financing expenses as fuel costs and borrowing costs escalated. Net loss that year was at P3.617 billion.
posted by philpower @ 8:56 AM,
