They said the adjustment in power generation rates as well as the proceeds from the sale of its assets would enable Napocor to trim down its total obligations and improve the status of its existing debt for an overall improvement of its debt portfolio.
The Arroyo administration had originally committed to absorb about P500 billion worth of government-guaranteed debt that the state-owned corporation has been having difficulties paying.
This year, the NG accounts started carrying an initial P200 billion that it was required to take over from Napocor as mandated under the Electric Power Industry Reform Act (EPIRA).
The remaining P300 billion, however, have not been loaded into the NG debt while the Arroyo administration struggled to improve its revenues by raising certain taxes.
According to Finance Undersecretary Nieves Osorio, the Department of Finance (DOF) would have to review Napocor’s projected financial numbers for the year but at the outset, the government based its assumption on a 30-centavo increase in its power rates.
Since the Energy Regulatory Commission (ERC) actually approved 36 centavos, Osorio said these numbers would move and the ending number could be better than expected.
"If we combine the impact of the power rates adjustment with the proceeds from privatization that we are sure will come in this year or next year, the amount of Napocor debt that we have to absorb will be less," Osorio said.
According to Osorio the additional inflows for Napocor would be used to eliminate its operating losses, service its debt and even settle some of its principal debts.
"Naturally, the government would not take over more than it has to because we also have our NG debt level to worry about," Osorio said. But she expressed optimism that should the rest of NPC’s privatization program prove successful the impact on the consolidated public sector debt would be significant.
Budget Secretary Emilia Boncodin said the standing policy was the same: Government would absorb all accumulated debt that the Napocor no longer has the capability to handle.
"So far, they are still able to service these debts but ultimately, the NG will still have to absorb that if we want the power sector reform program to advance," Boncodin said.
"Anyway, it’s only a matter whether the obligations will be in the Napocor books or in the NG books because these loans all carry the sovereign guarantee of the republic," Boncodin added. "It’s just cheaper for the NG to carry these loans."
According to Boncodin, the actual mechanism for absorbing the last P300-billion bulk would be discussed soon after the ERC approved the 36-centavo increase in power rates.