Napocor needs to raise $1B for next year

State-run National Power Corp. (Napocor) will have to tap the international debt market to raise $1 billion for its financing requirements for next year, it was disclosed yesterday by Finance Secretary Jose Isidro Camacho.

"They will need to do a lot of transactions," Camacho said, adding the National Government may undertake fund-raising for Napocor.

Camacho, who is concurrent Napocor chairman, did not say if the state-run firm will piggyback on the scheduled foreign borrowings of the National Government. Nor did he say if the $1-billion financing already includes the $400 million that Napocor wanted to raise through the issuance of bonds.

Analysts said Napocor may need to piggyback with government borrowings because creditors are wary about extending new loans to the debt-saddled state firm. With no new capital infusion and struggling with huge debts amid its privatization process, creditors consider lending to Napocor too risky.

Napocor will need $1 billion next year to settle its maturing obligations while a portion will be used to fully cover its programmed operating expenditures. About $144-million worth of Napocor loans from ING Barings will mature this month.

An earlier plan to complete a $400-million bond issue in the international debt market was junked. The seven-year bond issue that was supposed to be underwritten by Bear Stearns was shelved because of unfavorable news about reinsuring assets of Napocor.

The debt-saddled power firm is struggling financially. Earlier, it sought an extension of its deadline to comply with the conditions set by the Asian Development Bank (ADB) for the release of the second tranche of its $600-million Power Sector Reform Loan.

These conditions include fasttracking the Energy Commission’s ruling on Napocor’s proposed unbundling of tariffs, lowering of capital gearing ratios for Napocor and its proposed subsidiaries and the completion of the installation of metering infrastructure.

The National Government was also considering extending another P11 billion to Napocor through the issuance of short-term bonds.

The government could repeat what it did in September when it bought all P3-billion worth of short-term bonds it issued for the power company to complete its financing requirements for the rest of the year.

The purchase of P3-billion worth of short-term notes was followed by another P1.5 billion after two weeks.

Napocor is also considering the sale of at least six of its gas turbines to reduce government’s foreign borrowing for its $530-million financing requirement for the year.

Following the enactment of the Power Sector Restructuring Law, Napocor has been gearing up for privatization and cannot borrow on its own.