Release of huge foreign loans hinges on passage of power bill

Government is optimistic the country’s multilateral creditors will release some $1 billion in loans for the power sector this year in light of government’s renewed efforts to pass into law the Power Sector Reform Bill (PSRB).

"We are doing our part of the deal. We hope they consider our effort and release the loan after the bill is passed by this Congress," Socio-economic planning secretary Dante Canlas said yesterday.

The country’s major sources of loans — the Asian Development Bank, the World Bank and Japan Bank for International Cooperation (JBIC) — are expected to extend about $1 billion in financial assistance to the Philippines. But the release of the loan hinges on the passage of the PSRB.

The National Power Corp. (Napocor), the main recipient of these multilateral loans, had been asking ADB and the World Bank for a waiver for failure to meet some of the provisions in the loan covenants signed with the banks.

But Canlas said they believe the multilateral creditors will understand the predicament of the new administration. "They should understand that Mrs. Arroyo will have to review the bill before she approves it," he said.

ADB recently indicated its support to the Arroyo administration’s effort to review and consolidate the power bill. According to the ADB, it is willing to hold in reserve for two years the P15 billion ($300 million) loan it had allocated for the country’s power-reform program.

But the ADB warned that a waiver will not be given to Napocor if Congress will not be able to pass the power bill this session. Canlas, however, expressed optimism that the present Congress will enact the bill before the May elections and maybe hold a special session on June if the bill will not be passed in the 11th Congress.

Meanwhile, Trade and Industry Secretary Manuel Roxas II assured that the power sector reform bill would be passed into law before the 11th Congress adjourns this year.

According to Roxas, both the Senate and the House of representatives are working overtime to come up with a compromise consolidated version of the bill by this week.

A public hearing will then be held on Friday next week and a final version would be presented to President Arroyo the following Tuesday for her to either approve or veto.

Congress will go into recess this week in preparation for the May election.

However, Roxas assured that both houses agreed that the power sector reform bill must be passed before the 11th Congress adjourns because it is an important piece of economic legislation that investors are waiting for.

Reforming the power sector is of key importance to foreign investors who fear a return of the power outages that hit the country during the latter part of the Aquino administration.