Napocor incurs whopping P100-B loss

State-run National Power Corp. (Napocor) suffered a net loss of P100 billion for 2003, higher than the P75 billion expected for the year. The power firm incurred a net loss of P36 billion in the first half of last year which doubled in the remaining months of 2003.

"It’s really going to be more than what was earlier projected due to uncontrollable factors. It’s about P100 billion," a Napocor source said.

Napocor finance department senior manager Lorna Dy, in a separate interview, said the power firm had already incurred more losses than projected in the early part of 2003. Dy, however, declined to confirm the exact losses that the state-owned power company incurred last year.

"The financial report was already signed by our president Rogelio Murga. This, however, has yet to be presented to the management committee. All I can confirm is that we incurred P77 billion from the fluctuation of our currency against the dollar.

"The actual peso to the dollar rate last year was P54 to $1, now the peso is trading within P56 to $1 rate. The P77 billion loss was amortized on the life of the loan so it was treated as an outright expense," Dy said. Murga earlier projected that the firm’s losses may hit P75 billion in 2003.

He attributed the loses to the continued depreciation of the peso, payments for IPP (independent power producers) and for buy-out contracts such as the San Roque and Binga power contracts. "Much is to be blamed on the foreign exchange rate. The Central Bank’s assumption for the peso-US dollar rate this year and next year is P52 to $1. Now, the rate is nearly P56."

"We also need to pay the IPPs and the contracts that we will be buying out," Murga said adding the high cost of fuel in the world market and the P0.40 per kilowatt-hour cap on the purchased power cost adjustment mechanism could aggravate the firm’s financial burden.

In May 2002, President Arroyo ordered a temporary ceiling on the purchased power cost adjustment of Napocor of 40 centavos per kilowatthour which resulted in the reduction of power rates. This move resulted in billions of pesos losses for Napocor.

"It will only be the Energy Regulatory Commission (ERC) that can withdraw it," Dy added. Napocor would need at least $1 billion for debt service and another $1 billion as payments for the amortization of the capacity fees to its IPPs for this year.

The power firm was also affected by the decline in the power purchased by the Manila Electric Co.(Meralco), its biggest client.