Napocor sees higher sales, better financials

The state-run National Power Corp.’s (Napocor) is projecting full-year power sales to inch up slightly to 38,983 gigawatthours (gwh) from 36,596 gwh in 2004.

At the same time, Napocor is expecting a better financial picture in 2005 despite the projected tepid sales resulting from the anticipated slowdown in economic activities as spiraling crude oil prices threaten to fuel inflation and hinder economic growth.

"We expect an improvement in our financials and our net loss will definitely be lower than in 2004," said Napocor chief financial officer Lorna Dy.

In 2004, Napocor’s net loss was trimmed by a hefty 74.4 percent to P29.9 billion from P117 billion in 2003 .

Dy attributed the substantial cut in Napocor’s net loss last year primarily to the large decline of foreign exchange fluctuation losses which reached only P26.1 billion in 2004 compared to P78. 2 billion a year earlier. She said that last year, Napocor used a P56 to $1 benchmark for its debt servicing obligations, among others, but the peso improved to an average of 54 to $1.

She added that there was also an accrual of revenue amounting to P8.67 billion from its cost recovery mechanisms for fuel purchases and forex fluctuations. At the same time, Napocor gained from the increase in its power rates and several cost-cutting measures such as the reduction of the use of its more expensive oil-fired power plants.

The Napocor official said the approved power rate hikes of the firm should boost the value of the power generation assets that are scheduled for privatization because proceeds from the sale of these assets will be used to repay Napocor’s outstanding debts and this will subsequently ease the load for the National Government which is servicing its debts.

In April this year, the Energy Regulatory Commission allowed Napocor to hike its rates by an average of P5.56 centavos per kilowatthour (kwh) that brings the total average increase in the last eight months to P1.0354 per kwh.

Dy said that for 2005, Napocor expects to sustain its improved financial performance in the previous year, especially with the sale of its generation assets that would enable it to substantially trim its long-term liabilities that amounted to P1.04 trillion last year, a major portion of which is accounted for by its build-operate-transfer contracts forged with independent power producers.

Napocor’s foreign debts are one of the main causes of the country’s ballooning budget deficit.