The National Government is likely to absorb the P150-billion debt of the National Power Corp. (Napocor), a move that is expected to bring down power rates by 10 to 15 percent.
The proposal was taken up during the last meeting of the Economic Coordinating Council (ECC) which is now studying the proposal for inclusion in the draft Omnibus Power Restructuring Bill now pending in both houses of Congress.
Trade Secretary and ECC member Manuel Roxas II told reporters yesterday that the council tabled the proposal for the National Government to assume Napocor's debt since it was all government-guaranteed loans anyway.
Napocor is expected to incur a stranded cost of more than P300 billion when it is privatized, mainly due to expensive contracts it signed with independent power producers at the height of the power crisis in the early 1990s.
However, Roxas said the ECC is only considering absorbing P150 billion which was already included in the government's contingent liabilities since they were loans guaranteed by the National Government.
"This is also one of the reasons why government is very careful about guaranteeing loans because they all end up as contingent liabilities and it may eventually have to shoulder these loans," he pointed out.
If it is approved, Roxas said absorbing the amount effectively passes Napocor's obligations to taxpayers.
However, he said that reducing Napocor's total debt burden would have an impact on power rates because the state-owned power company will no longer have to pass the cost of debt service to power consumers.
Roxas said initial estimates by the Department of Energy indicate that this move would reduce power rates by 10 to 15 percent across the board for commercial, industrial and residential users.
"Aside from the direct impact on consumers, lowering power costs would also generate more economic activity that could easily offset the additional debt burden absorbed by government," Roxas explained.
The ECC is a superbody created and headed by President Estrada to decide on economic policies. The council is co-chaired by Finance Secretary Jose Pardo with Roxas as member, together with Agriculture Secretary Edgardo Angara, Socioeconomic Planning Secretary Felipe Medalla, Budget Secretary Benjamin Diokno and Executive Secretary Ronaldo Zamora.