Govt eyes $1-billion loan to pay down Napocor debts

THE government may undertake fresh borrowing to settle the maturing debts of state-owned National Power Corp. (Napocor). Energy Secretary Jose Ibazeta said state-run Power Sector Assets and Liabilities Management Corp. (Psalm) may tap banks for another $1 billion to settle or refinance Napocor’s maturing obligations.

“I think at the moment, they’re still continuing their liability management. I’m sure even after June 30 they will pursue it. What I know is that it will be bank financing but I don’t know when,” he said, referring to Psalm.

He said PSALM is prepared “any time and any day” to proceed with the proposed borrowing depending on market conditions.

Under the Electric Power Industry Reform Act of 2001, PSALM is mandated to privatize the assets and handle the liabilities of Napocor. Proceeds from the privatization will be used to settle the latter’s obligations.

PSALM’s borrowings will be paid through the universal charge—a tariff imposed on all electricity consumers—and from the sale of Napocor’s assets.

At end-December, Napocor’s outstanding debt stood at $16.5 billion, 40 percent of which is set to mature starting this year until 2014.

Ibazeta had said PSALM has yet to identify how much of Napocor’s remaining obligations would be refinanced within the year.

But for 2010, Napocor has around $3-billion worth of maturing loans.

Ma. Luz Caminero, PSALM president and chief executive officer, earlier said it has already raised money to settle a third of maturing obligations this year through a recent bond issuance.

Napocor’s debts had been the single-biggest drag on the national government’s finances, as these liabilities enjoy a sovereign guarantee.

The national government has been running a budget deficit since the Asian financial crisis of a decade ago.
For this year, the government has programmed a fiscal gap of nearly P300 billion.

Besides assuming the debt payments of state-owned firms like Napocor, the government has incurred tax collection shortfalls, forcing it to borrow both here and abroad to meet spending targets. –EUAN PAULO C. AÑONUEVO REPORTER, Manila times