NAPOCOR DEBT ASSESSED
MANILA, November 5, 2004 (STAR) By Des Ferriols - The Arroyo administration might have to wait at least a year or two before it could afford to absorb the bulk of the National Power Corp.ís (Napocor) debts amounting to P300 billion.
The Development Budget Coordinating Committee (DBCC) met yesterday at the Department of Finance (DOF) to finalize the list of Napocorís most difficult obligations that would comprise the bulk of the amount the national government had committed to absorb this year.
Under the Energy and Power Industry Reform Act (Epira), the government is obligated to absorb only P200 billion of Napocorís debt but the Arroyo administration has made the summary admission that it would absorb at least P500 billion.
Napocorís total debt that needed immediate rescue by the government was around P560 billion including interest payments.
According to Budget Secretary Emilia Boncodin, the list for the initial P200 billion has not been finalized but she said it would most likely contain Napocorís most expensive and most difficult obligations guaranteed by the government.
"We want to complete this first and get it implemented before we start talking about the rest of (Napocorís) debts," Boncodin said. "But it would have to wait, maybe next year or so."
According to Boncodin, the Arroyo administration was picking from among Napocorís most difficult obligations that carried sovereign guarantees. The government has already put Napocor back in the grinder to further trim its organization and cut down on expenses.
The state-run power firm started streamlining its operations this year, laying half of its employees to roughly 2,500 as of February.
When the second wave of streamlining is complete, the total workforce would go down further. 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 staff.
Reducing Napocorís expenses would also reduce the need for the government to borrow in order to refinance the companyís maturing obligations as well as its expenditures.
The Finance and Energy departments had estimated that Napocor would need to increase its power rates by at least P1.50 per kilowatt-hour in order to save the government from borrowing at least P100 billion.
The Energy Regulatory Commission (ERC) initially approved a 98-centavo increase but Cabinet officials said the Napocor would need between P1.45 to P1.50 per 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 will not be enough to wipe out its annual deficit.
Since the Arroyo administration has decided to assume some P560 billion of Napocorís debts, it would be up to the national government to pare down its annual funding requirement.
Reported by: Sol Jose Vanzi
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