Local banks to raise $1.5 billion for NGCP

MANILA, Philippines - Local banks are ready to raise up to $1.5 billion for the National Grid Corp. of the Philippines’ prepayment of the concession contract with the National Transmission Corp. (TransCo), an industry official said.

BDO Capital and Investment Corp. president Eduardo Francisco said “local banks can easily work out half of the $3 billion the NGCP would need to raise for prepayment of the concession contract.”

According to Francisco, a number of banks have already submitted various financing proposals with NGCP.

But apparently, NGCP’s Chinese shareholders “could not make up their mind” on the prepayment scheme.

NGCP is composed of Monte Oro Grid Resources Corp. which is owned by Henry Sy Jr. Group’s One Taipan Holdings, Calaca High Power Corp. led by Robert Coyuito and State Grid Corp of China.

The consortium won the concession to operate and manage the country’s transmission highway in a public bidding conducted by PSALM in December 2007. The consortium offered $3.95 billion for the concession contract.

NGCP took over the operations and maintenance of the country’s transmission network from the government in January 2009.

It was granted a franchise by Congress to operate and maintain TransCo for 25-year period and it can renew the lease contract for another 25 years.

It was learned that as early as first quarter this year, the term sheets from banks have been pouring in.

“There are term sheets to refinance the prepayment,” he said.

In a text message to The STAR, Power Sector Assets and Liabilities Management Corp. (PSALM) president and CEO Emmanuel Ledesma Jr., on the other hand said they are thinking of prepaying the government next year.

He admitted that they are still assessing the market situation if it would be advantageous for the government to allow NGCP to prepay its concession contract.

“Prepayment may happen next year after completion of evaluation to keep PSALM while considering prevalent rates,” he said.

The idea of prepaying the concession contract cropped up in 2011 when PSALM revealed that they were evaluating terms for the prepayment of the privatization proceeds from NGCP.

The proposed prepayment of NGCP privatization proceeds would allow PSALM to meet its cash flow requirements and avoid incurring additional loans for payment of maturing obligations.

Shortfall in cash flow, he said, arises due to the mismatch in the timing of the collection of these receivables and the maturity of debt obligation payments.