DOE pushes bailout plan for Napocor's SPUG

MANILA, Philippines -  The Department of Energy (DOE) will present to Malacañang today (Feb. 16) a bailout program for the Small Power Utilities Group (SPUG) of the National Power Corp. (Napocor).

Energy Secretary Jose Rene Almendras said Napocor’s financial problem was an offshoot of the non-approval of its proposed universal charge (UC) by the Energy Regulatory Commission (ERC).

“The ERC trimmed down the UC. So we are now working out a financing scheme that would help Napocor raise funds and cut down on its expenses so we will know how much bridge financing we would need to run Napocor,” he said.

The DOE chief said since Napocor is prohibited from borrowing, it has to look for “innovative solutions” and “alternatives” to finance its SPUG operations. 

Napocor has been in a financial dilemma, owing more than P1 billion alone to fuel suppliers.

“We are now reviewing and looking closely at Napocor’s cash flow and monthly revenue stream. If this will not be resolved, Napocor will not last until next month,” he said.

Power rates in the SPUG areas are highly-subsidized and result in significant losses for Napocor. From 9.78 centavos per kilowatthour (kwh) under its provisional authority, ERC reduced the UC missionary electrification rate to 4.53 centavos per kwh.

It would also be noted that a recent legal opinion of the Department of Justice has barred Napocor from engaging in further borrowings and in fund-raising activities like bond issuances.

This has effectively prevented Napocor from bridge financing any funding shortfall in its missionary electrification operations.

Recently, the ERC allowed Napocor to raise its rates in the off-grid areas being serviced by the SPUG in a bid to prevent the disruption of electricity supply to these remote islands and inland barangays.

The ERC authorized Napocor to adjust its rates by 94.92 centavos per kwh in the SPUG areas in Luzon starting its January 2011 billing period. An adjustment of P1.1950 per kwh was also approved in the SPUG-Visayas areas, while an increase of P1.4680 per kwh was authorized for the SPUG areas in Mindanao.

As the missionary electrification arm of Napocor, SPUG operates 242 power plants with a combined capacity of almost 200 megawatts in far-flung islands that are not connected to any of the main grids in Luzon, Visayas and Mindanao.