"We are still sticking to our projected net loss this year of P115 billion," said Napocor president Rogelio M. Murga, even as analysts said the power utility is likely to incur a bigger net loss for 2004 based on its dismal financial performance in the previous year.
Napocor recently reported a net loss of P100 billion for 2003, significantly higher than its net loss of P33.7 billion in 2002. Last year’s net loss also exceeded the earlier net loss estimate of P75 billion.
Industry analysts said that Napocor’s losing streak is likely to continue and it will have difficulty maintaining its projected net loss for 2004 as the company continues to struggle with huge operating losses.
Murga said the next few weeks will be crucial for Napocor as it reviews its projections.
"We will be able to determine in the coming weeks if we need to adjust our numbers, along with our net loss projection," said Murga.
In 2003, Napocor’s net loss reached a whopping P100 billion because of higher borrowing cost, aggravated by the peso’s drop against the dollar.
Napocor’s string of losses dates back to 1998 when the Asian financial crisis resulted in poor electricity sales. It also led to higher operating and financing expenses as fuel costs and borrowing costs escalated. Net loss that year was at P3.617 billion.
The ensuing years saw no relief for Napocor. In 1999, its net loss went up to P5.953 billion. In 2000, net loss more than doubled to P12.964 billion. In 2001, net loss improved to P10.4 billion.
The company’s financial skid accelerated in 2002 as Napocor posted a net loss of P33.7 billion, blaming this on the 14 percent drop in energy sales due to lower off-takes by electric utlities and industries, along with poor sales in Luzon which makes up for about 70 percent of its market.
Napocor’s finances also suffered when President Arroyo ordered the power firm to cap its purchased power cost adjustment (PPCA) at 40 centavos per kilowatt hour. The PPCA is the automatic cost recovery scheme that allows Napocor to pass on to customers costs associated with foreign-currency denominated obligations under its existing contracts with independent power producers.
Compounding Napocor’s financial woes is its burgeoning debts, as the Department of Finance said that Napocor’s debts has piled up to P1.3 trillion as of end-Dec. 2003, which is 30 percent of the country’s total debt of P3.41 trillion last year.
To pay off maturing debts and bankroll its operations, Napocor last year tapped the financial markets for $1.2 billion.
For 2004, Napocor has to raise $1.5 billion. Of this amount, $500 million was already raised with the national government reopening $400 million worth of Philippine bonds that will mature in 2011 and 2014. Another $100 million was raised through a placement with ING Bank.