Puno warns of added debts, higher power costs

The government may incur additional debts and a possible hike in power rates if the National Power Corp. (Napocor) is not privatized soon, Napocor president and chief executive officer Federico Puno said recently.

He said the National Government will have to constantly recapitalize the government power firm as long as it remains in the public sector realm.

"There will be three basic scenarios if Napocor is not privatized. First, we have (Napocor) to be recapitalized. The second scenario is that government would be constantly borrowing from local and foreign sources to refinancing its annual operations, upgrading and expansion programs, and debt servicing," Puno said.

Napocor's total debt was estimated at P445 billion or $6.5 billion at the start of 1999.

Puno said failure to privatize Napocor would also mean a regime of high basic power rates for the industrial, commercial and residential clients. It could also mean the removal of subsidies between regions and regional grids, and between major sectoral groups, he said.

The rate increase will be the alternative to any increases in authorized capital for Napocor if government does not approve a bigger budget for the government power firm.

"The simpliest route is really to reform the electric sector and privatize Napocor," Puno said, during a forum sponsored by the Washington Sycip Police Forum Center.

The privatization as well as the reform of the energy sector is embodied in House Bill (HB) 8457, otherwise known as the Comprehensive Electricity Industry Restructuring Bill.