NAPOCOR  FACES  FURTHER  DOWNSIZING  TO  CUT COSTS

MANILA, October 29, 2004 (STAR) By Des Ferriols - After assuming an initial P200 billion worth of debts of the National Power Corp. (Napocor), the National Government (NG) will put the power company back in the grinder to further trim its organization and cut down on expenses.

Finance Secretary and Napocor chairman Juanita Amatong told reporters yesterday that the power firmís board has started to review the companyís organization to impose more cuts in its plantilla.

Amatong chaired yesterdayís board meeting where the streamlining was discussed in line with the program to cut down Napocorís expenses and generate savings by reducing its manpower base to the minimum.

Napocor has already streamlined its ranks since early this year from 5,000 employees to roughly 2,500 as of February. When the second wave of streamlining is complete, the total workforce would go down further although 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.

One of the departments that was expected to take a hit would be Napocorís legal department as the company planned to outsource some of its legal requirements instead of retaining a full-time, in-house legal staff.

Amatong said that once Napocorís assets have been transferred and privatized, it would require even less people to run the company and much of the functions would be for supervisory purposes.

Napocor is one of the many government-owned and controlled corporations that are exempted from the salary standardization policy of the government.

This meant that Napocor employees were not covered by the salary cap applicable to government employees. By reducing its workforce, the NG hopes to reduce the companyís expenses and cut down on its losses.

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 Napocorís expenses, according to Amatong, would also reduce the need for the government to borrow in order to refinance the companyís maturing obligations as well as its expenditures.

The Department of Finance and the Department of Energy had estimated that Napocor would need to increase its power rates by at least P1.5 per kilowatt-hour in order to save the government at least P100 billion in new borrowings.

The Energy Regulatory Commission (ERC) has initially approved a 98-centavo per kwh increase but Malacanang officials said Napocor would need between P1.45/kwh to P1.5/kwh for it to break even.

According to the DOF, the 98-centavo increase would take out P106 billion from Napocorís annual funding requirement but this was not enough to wipe out its annual deficit.

Aside from further adjustments in its rates, Napocor would also have to reduce its own expenses beginning with the streamlining of its bureaucracy.

Since the Arroyo administration has decided to assume some P560 billion of Napocorís debts, it would be up to the NG to pare down its annual funding requirement.


Reported by: Sol Jose Vanzi

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