Napocor faces another downgrade by S&P

International credit rating agency, Standard and Poor’s (S&P), will maintain a negative rating and may even downgrade the National Power Corp. (Napocor) as a result of its continuing failure to shore up its finances.

"They (S&P) have indicated that (possible downgrade)," Napocor sources said, adding that the credit rating of the power firm, however, still depends on the National Government. "The company’s rating is the same as that of the NG as Napocor debts are guaranteed by the government."

The company incurred a net loss of P11.9 billion in 2000, higher than the P6-billion loss registered in 1999.

The sources said S&P has sent a letter informing Napocor finance chief Antonio Ingco of the credit firm’s annual review scheduled in the second quarter of the year. "The review may be done by May this year," the sources said.

The last S&P review, which included an extensive review of the company’s overall financial portfolio, was conducted last August 2000.

According to sources, S&P is requesting for a schedule of the review which is done annually. "They want to take a look again at Napocor’s overall financial performance. They want to see all aspects of the company‘s operations," the sources said.

A similar yearly audit, sources said, will also be carried out by Moody’s, another international credit firm.

Last year at the height of the jueteng scandal, S&P downgraded its outlook from stable to negative and its rating to BB+. Sources said there are indications of another downgrade due to delays in the passage of the Power Sector Reform Bill.

Last week, S&P issued a statement raising concerns regarding the long-term prospects for Napocor continued delays in the passage of legislation aimed at privatizing Philippine electricity industry.

S&P noted that the proposed power bill is expected to shift the heavy financial burden associated with existing and new power plant construction away from Napocor onto the private sector and impose guidelines for the recovery of stranded costs.

The credit rating firm said that until the new management team announces an updated plan for dealing with problems in the electricity sector, the outlook for Napocor’s credit rating will remain negative, it said.