PSALM explores other funding options

The Power Sector Assets and Liabilities Management Corp. (PSALM) is drawing up a number of options to cover the financing requirement of the National Power Corp. (Napocor) for 2004, a ranking PSALM official said.

"We are looking at possible scenarios for next year, such as privatization," PSALM president Edgardo del Fonso said. One of the options being looked at if privatization fails is the increase in tariff rates.

"Then we will apply with the Energy Regulatory Commission (ERC) for the increase in tariff rates. We are in the process of preparing the financing schemes for Napocor for next year. And the way to start that is the list that needs to be determined first," he said.

The PSALM chief said they expect Napocor to incur losses in the second half of this year but it will not as huge as the losses during the first semester.

Napocor reportedly incurred about P38 billion in losses in the first six months of 2003. For this year, the company projected that its net loss may reach P70 billion. But the rate increase granted by the ERC will lower the losses by P20 billion.

The state-run power firm will need some $1.2 billion in financing requirement this year.

For 2003, Napocor is expected to pay some P663.67 million or $13.3 million in debt services including principal and interest.

But the huge debts of Napocor could only be reduced through privatization, wherein the government will no longer be burdened with providing financing requirement for the power generation firm.

The sale of Napocor assets will generate some $5 billion in proceeds. The privatization of Napocor’s transmission assets is expected to fetch some $2 to $2.5 billion while it can raise another $2.5 billion from the sale of the generation assets.