Napocor needs P15B to operate small island grids next year

MANILA, Philippines - State-run National Power Corp. (Napocor) would need another P15 billion to operate the small island grids next year, a top company official said.

Napocor president Froilan Tampinco said they would finance this capital requirement through its usual sources of funds such as universal charge/missionary electrification (UCME) and from existing plants’ revenues.

He said they are hoping that the Energy Regulatory Commission (ERC) would allow them to increase the UCME charges by seven centavos so they could amply fund their operations.

This year, Napocor’s financing requirement is about the same level as the projected budget for 2012.

The National Government has prohibited Napocor from borrowing to raise more funds for its financing requirement.

To be able to cope up with its finances, the Department of Budget and Management (DBM) had released a portion of Napocor’s reimbursement for the maintenance of the Bataan Nuclear Power Plant.

Napocor spends about P40 million to P50 million per year for the BNPP maintenance.

Under the Electric Power Industry Reform Act (EPIRA), Napocor will have to privatize its power plants. After the privatization of its power facilities, Napocor would be left with the function of operating the Small Power Utilities Group (SPUG) and those power plants that will not be sold by the Power Sector Assets and Liabilities Management Corp. (PSALM), an entity created under the EPIRA to sell 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 UCME as determined by ERC.

Napocor’s 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 UCME.

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 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.

The 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.