NAPOCOR  DEBTS  COULD  REACH  P600 BILLION

MANILA
, June 15 , 2004
 (STAR)
By Des Ferriols  -  The amount of debt that government will absorb from the National Power Corp. (Napocor) can go as high as P600 billion, 20 percent more than originally estimated.

Top level sources said P500 billion was the amount agreed upon when economic managers met last week to sort through Napocorís debt portfolio.

Budget Secretary Emilia Boncodin pointed out, however, that this amount came from the second-pass review. She said the final figure could change depending on subsequent reviews of the power firmís portfolio.

Boncodin declined to hazard a guess on what the final figure would look like but another official involved in the ongoing discussions said the amount could go up to P600 billion.

According to Boncodin, a committee composed of the countryís economic managers still has to go through Napocorís debt portfolio and pick out which one it would absorb.

"In a way, its like cherry picking except we will be taking out the worst instead of the best ones from the lot," Boncodin said. "We have to take out the loans that Napocor is having a hard time dealing with, especially the high-interest ones."

Boncodin said the initial amount of P500 billion was decided on during the second economic managers meeting where the power firmís problem was the primary agenda.

This portfolio contains mostly foreign currency denominated debts that tend to be more expensive than domestic borrowing. Boncodin said these are the loans that Napocor cannot support anymore.

The Electric Power Industry Reform Act (EPIRA) requires the government to assume only P200 billion but Boncodin said the actual amount might go up to P500 billion.

"At first we said P200 billion but according to Napocor, taking out even this much will still leave their debt level beyond what they can manage," she said.

According to Finance Secretary Juanita Amatong, Napocorís debts would be transferred to the NG "as soon as possible and all at once."

"Obviously, the National Governmentís deficit will be affected by the interest payments on these debts and it will be a cash flow issue," Amatong said. "But the principal payments will be below the line."


Reported by: Sol Jose Vanzi

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