ERC seen to okay only 45¢ of the 98¢ rate hike sought by Napocor
Friday, December 10, 2004
By Des FerriolsThe Philippine Star 12/10/2004
The Energy Regulatory Commission (ERC) is expected to approve only about 45 centavos of the 98-centavo power rate adjustment applied for by the National Power Corp. (Napocor), just enough to allow the beleaguered company to plug its operating losses.
Sources disclosed yesterday that the ERC would not grant the whole 98 centavos that Napocor asked for in order to completely wipe out its operating losses and give it an eight percent rate of return (ROR).
Finance Secretary and Napocor chairman Juanita Amatong said she has not heard of ERC’s inclination but said that if the commission approves at least 45 centavos, it would remove Napocor’s operating deficit.
Earlier this year, the ERC granted only half of Napocor’s request for a total of P1.87 per kilowatt-hour increase in power rate, not nearly enough to plug its annual operating deficit of about P50 billion.
According to Amatong, even the 45-centavo second tranche of power rate adjustment would alleviate Napocor’s operating deficit but it would not meet the eight percent RORB required of Napocor by its creditors.
At P1.45 per kwh adjustment, it would still leave Napocor with financing losses of about $900 million to $1 billion that the National Government (NG) would have to borrow on behalf of the power company. In the meantime,
Napocor has already started to take steps in order to reduce its operating losses, reviewing the company’s organization to impose more cuts in its plantilla.
Amatong said Napocor was close to finalizing its reorganization after the Napocor board discussed the streamlining program in line with the plan to cut down its expenses and generate savings by reducing its manpower base to the bare minimum.
Napocor has already streamlined its organization beginning this year from 5,000 employees to roughly 2,500 employees as of February. When the second wave of streamlining is complete, the total workforce would go down further but Amatong did not disclose how severe the reduction would be.
The proposed streamlining would involve the realignment of internal functions and operations, separating the core operations that would be retained and line functions that could be outsourced.
Amatong admitted that Napocor was the biggest cause of financial hemorrhage in government, especially after the NG decided to absorb some P500 billion worth of debts that it has accumulated over the decades.
Reducing Napocor expenses, according to Amatong, would also reduce the need for the government to borrow in order to refinance the company’s maturing obligations as well as its expenditures. According to the DOF, the 98-centavo increase would take out P106 billion from Napocor’s annual funding requirement but this was not enough to wipe out its annual deficit.
posted by philpower @ 9:16 AM,
