RP top bank offers P10-B loan facility for Transco buyer

A top financial institution has offered to provide between P5 billion to P10-billion worth of peso-denominated loan to the winning concessionaire for the assets of the National Transmission Corp. (Transco), Energy Secretary Vincent S. Perez said.

At the Privatization Update Forum conducted by the Power Sector Assets and Liabilities Management Corp. (PSALM), Perez said the proposed financing would enable the Philippine government to obtain a higher downpayment for the lease of Tranco’s assets.

"This local financial institution, which is one of the top banks in the country, is willing to provide financing to the winning concessionaire. We are very appreciative of this effort. This will allow the concessionaire to have a borrowing option," he said.

Perez said the loan will carry a market-based interest rate with maturity of five to 10 years.

At the same time, Perez reported that another company has expressed interest in bidding for Transco’s assets.

PSALM president Raphael Lotilla described the company as a multinational firm with the technical and financial capability to bid for Transco.

PSALM is currently in talks with two interested firms for Transco’s assets – Singapore Power Corp. (SPC) and an unidentified Finnish firm.

SPC was the sole bidder for Transco when it was auctioned off twice last year. With this, the government decided to just enter into a negotiated deal with SPC.

Based on the approved privatization plan for Transco, a concessionaire which can finance, operate, expand and maintain and manage the transmission facilities – can enter into a lease agreement for 25 years, renewable for another 25 years.

The concessionaire is also allowed to pay its lease on a deferred scheme over a period of time.

However, PSALM has not started any formal talks with any of the prospective buyers of Transco.

Under the proposed restructuring timeline, PSALM was supposed to renegotiate supply contracts with distribution utilities (DUS) in the first and second quarter of the year.

Within the first half of 2004, it is also expected that PSALM will undertake the sale of the sub-transmission assets of DUs.

Lotilla said they also expect the official transfer of the assets, contracts and debts of National Power Corp. (Napocor) to Transco. The Electric Power Industry Reform Act (EPIRA) created Transco to handle the transmission function of Napocor.

Towards the end of this year, PSALM plans to appoint the administrator for the independent power producers (IPPs). During this period, it is also expected that the actual Wholesale Electricity Spot Market (WESM) will be in place in preparation for retail competition and open access in the power industry.

In a related development, Malacanang has appointed former PSALM president Edgardo del Fonso as special advisor for energy affairs with the rank of DOE Undersecretary.

Del Fonso resigned from his post in PSALM last year for health reasons.