NPC stranded debts remain high at $ 7 B
Monday, June 12, 2006
By MYRNA M. VELASCO
The stranded debts of the National Power Corporation (NPC) remain high at .0 billion, and the Power Sector Assets and Liabilities Management Corporation (PSALM) admitted that it can only rely on the proceeds of privatization to cut this figure down.
PSALM president Nieves L. Osorio bared to members of the Joint Congressional Power Commission (JCPC) that "NPC’s stranded debts is currently .0 billion but that will go down if we already have proceeds from privatization."
Such a revelation only indicates that the level of indebtedness of the state-owned power firm has just gotten worse even after the mandated absorption by the national government of at least P200 billion of its outstanding liabilities.
It would be noted that in the last five years, considered as window for the transition in working out privatization of the NPC assets, the practical resource of PSALM or the government would be to tap new borrowings so it can plug the power firm’s cash deficit in sustaining its operations.
A Presidential mandate to cap the rates of NPC at P0.40 per kilowatt hour (kWh) in 2002 was widely perceived to have greatly contributed to the power firm’s financial hemorrhage.
Even at a measly income of P16 million penciled in last year, the government is aware that it needs more work to effect some fixing in NPC’s finances; and also the future of the Philippine power industry which was generally ruled by its monopoly for almost 70 years.
PSALM previously made pronouncements that the privatization of the NPC assets would be the ultimate key to unchain the power company and the country from mounting debts.
With most of the NPC borrowings backed up by sovereign guarantees, the health of the national coffers was also severely affected with the huge debts incurred by the state-run firm.
For this year, PSALM plans to tap new round of borrowings to refinance some maturing obligations. The amount would depend on whether or not the expected 7 million upfront payment for the 600-megawatt Masinloc coal-fired facility would finally be turned over this June 30 by the asset buyers.
Bulk of the power firm’s financing needs would be for the repayment of a bullet obligation amounting to 0 million within the second half of the year.
The assumption by PSALM of the ownership of the NPC’s generation assets, liabilities, contracts with the independent power producers, real estate and all other disposable assets is pursuant to Section 49 of the Electric Power Industry Reform Act.
In regard to this mandated transfer of assets and liabilities, PSALM was also made to assume "full powers" over various transactions relating to NPC’s continued operations; including loans administration and procurement and in managing its portfolio of assets.
There remains some conditions yet to be satisfied or completed to effect the actual transfer of the assets; including obligation transfer process; creditors’ consent solicitation, review of transfer and amendment agreement by the Bangko Sentral ng Pilipinas (BSP); clearance from the inter-agency committee and a final approval of the Monetary Board.
Relative to the foregoing transfer agreement, NPC and PSALM shall execute a General Framework Agreement (GFA) which will detail out the terms and conditions for the services and functions that the NPC shall undertake for PSALM while the asset transfer process is still being finalized, primarily in the operation of the facilities.
posted by philpower @ 11:10 AM,
