Government won’t absorb Napocor’s stranded cost immediately

Trade and Industry Secretary Manuel Roxas II assured yesterday that government will not fully and immediately absorb the stranded cost incurred by the National Power Corp. (Napocor) from independent power producers (IPPs).

"Government has come up with a mechanism that would individually review the stranded cost and determine if the government should absorb the liabilities," Roxas said.

Under the proposed privatization of the Napocor, government will have to absorb the power firm’s liabilities amounting to more than P250 billion. These include the stranded cost of IPPs under an agreement it has with the government.

The Napocor, a government-owned or controlled corporation (GOCC) has been a big drain on government resources, contributing to its substantial budget deficit.

Roxas expressed his full support for the power sector reform bill which is currently being deliberated upon by Congress in a special session this week.

Earlier, Energy Secretary Jose Isidro Camacho warned that failure to pass the power sector reform bill could result in higher power prices next year.