Deferred financing scheme for power utilities mulled

State-run National Transmission Corp. (Transco) is looking at the possibility of offering a deferred financing scheme for qualified distribution utilities (DUs) interested in acquiring its sub-transmission assets (STAs).

Transco chief operating officer Roque Corpuz said they are trying to look for ways to expand the granting of the said financial assistance not only to the electric cooperatives (ECs) but also to DUs.

"We have developed guidelines for DUs (to avail of the financing scheme) but we still have to bring this up to the Transco board and eventually to the Energy Regulatory Commission (ERC) for approval," Corpuz said.

Corpuz said based on the preliminary guidelines, the DUs may be offered the financing scheme but at higher interest rates and shorter payment maturity.

Transco president Alan T. Ortiz, for his part, said there are already six ECs from Visayas and five from Mindanao that have signified interest to avail of the financing scheme.

But Ortiz said these ECs are awaiting the ERC approval on the first two acquisitions of the STAs.

"They want to see how the ERC will approve the acquisition contract of San Fernando Electric Cooperative and Cabanatuan Electric Cooperative. They want to make it as a template model," Ortiz said.

In April this year, Transco finalized for the sale of its sub-transmission assets worth P27.3 million to SFELAPCO and CELCOR/Angeles Electric Co. (AEC). Following the first ever sale of its sub-transmission assets SFELAPCO in January this year, Transco has signed agreements for the sale of about 27 circuit-kms of sub-transmission lines to Cabanatuan Electric Corp. (CELCOR) and Angeles Electric Corp. (AEC).CELCOR and AEC are purchasing the assets priced at P 11.16 million and P16.17 million, respectively.

The financing scheme will be funded by the Development Bank of the Philippines (DBP) through a $10 million initial funding assistance from World Bank.

Corpuz said the Manila Electric Co. (Meralco) has expressed interest to buy the STAs within its franchise area only if it could avail of the deferred payment facility.

Other DUs like the Cagayan de Oro Electric Co. (Cepalco) and Davao Electric and Light Co. have also signified interest to bid for the STAs.

Recently, the Transco board approved the lease purchase financing program that will be offered to ECs for the acquisition of the STAs.

Under this scheme, technically and financially qualified electric coops will only be required to pay a downpayment equivalent to 20 percent of the selling price to acquire possession of the sub-transmission assets.

Transco will turn over the responsibility of operating and maintaining these assets to the electric coops. The revenue from these assets will likewise accrue to the coops.

The coops will acquire ownership of the assets after they have completed payment of the remaining 80 percent of the selling price by installment basis and over a period of time. In this case, the repayment period will be spread over 75 percent of the remaining life of the assets.

The financing scheme being offered by Transco gives the country’s 119 electric cooperatives an additional option in their bid to acquire the assets. The DBP has also opened a credit facility for sub-transmission assets expansion and improvement under its rural electrification program.

Transco plans to complete the divestment of its sub-transmission assets by the end of next year. It is selling these assets in compliance with the Electric Power Industry Reform Act of 2001 which mandates that sub-transmission assets shall be operated and maintained by Transco until their disposal to qualified distribution utilities, which shall take over the responsibility of planning, design, construction, operation, and maintenance of the said assets.

The ERC defines sub-transmission assets as lines used to transport power from the utilities to end-users. Typically, these lines are rated 69kV and below.