Napocor eyes JBIC loan to finance wholesale electricity spot market

The National Power Corp. (Napocor) is looking at the possibility of tapping Japan Bank for International Cooperation (JBIC) to finance half of the needed budget to form the country’s first wholesale electricity spot market (WESM).

"There is a proposal to ask JBIC for another $40 million," Napocor sources told The Star.

The sources said while the power firm has already asked the Asian Development Bank (ADB) to provide $40 million for WESM, it will need another $40 million to complete the $80-million budget required for the setting up of such infrastructure.

"Most of the time, JBIC provides co-financing fund for ADB-funded projects," the sources said.

ADB and JBIC are two of the country’s biggest multilateral creditors which account for more than 50 percent of Napocor’s borrowings.

Under the Electric Power Industry Reform Act of 2001 or Republic Act 9136, the DOE should form a WESM similar to that of the local stock market, within a year after the passage of the law.

The setting up of a WESM is one of the conditionalities tied to the release of the $200- million third tranche of the $600-million Power Sector Reform Loan (PSRL) of which $100 million will come from ADB and another $100 million from JBIC.

WESM is an integral part of providing a deregulated environment for the power sector. This will allow the consumers to have an option as to where they could buy the cheapest power.

Once the WESM is set up, it is expected that the electricity cost will go down by about 40 centavos per kilowatthour. WESM is expected to be in place within the first half of 2003.

Lowering the electricity bills of end-users is one of the major thrusts of the Arroyo administration.

Based on the plan, WESM will operate like the stock market. It would provide procedures for establishing the merit order dispatch of power for each time period; determining the market-clearing price for each time period; administering the market; prescribing guidelines for the market operations in system emergencies; and oversee transaction billing or settlement procedures. – Donnabelle Gatdula