DOE holds borrowing plans of Napocor

MANILA, Philippines - The Department of Energy (DOE) has put on hold the borrowing plans of the National Power Corp. (Napocor) pending a study of the operations of the small power utilities group (SPUG) operations.

“These are on hold. I really want to re-study the SPUG thing,” Energy Secretary Jose Rene Almendras told reporters on the sidelines of the government’s mid-year economic briefing at the Dusit Hotel in Makati yesterday.

Almendras said he had directed the state-owned power generation company to revisit its SPUG strategies.

“I asked Napocor to study their model for the SPUGs, the business model. The fuel procurement practices and all these things that I have been informed that need attention,” he said.

Napocor earlier raised the possibility of offering some P15 billion worth of peso-denominated bonds to finance the SPUG capital requirement.

Napocor had set aside the issuance of P7 billion worth of bonds after a successful P4-billion bridge financing.

Under the Electric Power Industry Reform Act (EPIRA), Napocor will have to privatize its power plants, after which it would be left with the function of operating the SPUG and those power plants that will not be sold by the Power Sector Assets and Liabilities Management Corp., an entity created under the EPIRA to dispose off the Napocor assets.

EPIRA mandates that funds for the operations of SPUG shall come from the revenues from sales in the missionary areas and from the universal charge for missionary electrification.

The SPUG takes a leading role in the planning the power development in the missionary areas. It assesses requirements and prospects for missionary electrification including the program for private sector participation. It also acts as the petitioner and local administration of the universal charge for missionary electrification.

Missionary electrification is funded from revenues of the sales to customers in the SPUG areas and universal charge collected from all electricity end-users as determined by the Energy Regulatory Commission (ERC).

The advances made by Napocor usually come from revenues from its main grid assets. However, with the turnover of assets to winning private bidders and transferred to PSALM prior to privatization, Napocor’s capability to provide advances for missionary electrification is significantly diminished.

SPUG operates 304 generating units with a total generated capacity of about 129 megawatts. Its operation includes a hydroelectric plant and a hybrid wind turbine farm. It also serves 78 island grid and eight isolated grids, providing electricity to 42 customers consisting of 39 electric cooperatives and three local government units.