WB, PSALM soon to ink accord on transfer of Napocor assets

The World Bank is expected to give its universal consent on the transfer of assets from the National Power Corp. (Napocor) to the Power Sector Assets and Liabilities Management Corp. (PSALM) before yearend, a top PSALM official said over the weekend.

PSALM president Nieves Osorio said they expect to sign an agreement with the WB, one of Napocor’s biggest multilateral creditors, within the remaining months of the year.

"We are hoping that a universal consent from WB will be secured by yearend," she said. 

Osorio said WB is just awaiting an inter-agency report on Napocor’s foreign loans.

Of the three largest multilateral lenders of Napocor, only the Asian Development Bank (ADB) has signed an omnibus transfer agreement with PSALM early this year.

According to Osorio, another creditor, Japan Bank for International Cooperation (JBIC), is also in the process of completing documentation on the transfer of assets.

"JBIC is processing the documentary transfer.  The process is ongoing and is expected to be complete within the succeeding months," she said.

The universal consent is crucial in the privatization of Napocor assets as this will facilitate the smooth transfer of ownership of the power facilities to the winning bidders or new owners of the Napocor plants.

With the absence of the universal consent, the creditor banks are giving their consent on a per plant basis.

One of the stumbling blocks in securing the universal consent is the issue on which agency will assume the liabilities and obligations of the power plant like those related to right-of-way problems.

Earlier, the creditors have asked the government to effect the transfer of some P200 billion loans for Napocor to PSALM before they give their go-signal on the universal consent.

The National Government already approved the transfer of the P200 billion in Dec. 2004 but WB and JBIC remain apprehensive in giving their consent.

Another concern raised by JBIC is for the issuance of sovereign guarantees on all the official development assistance (ODA) loans extended to Napocor.

The Japan-based financial institution wants to get an assurance from the government that it would pay these loans in case PSALM fails to meet its financial obligations.

JBIC has extended ODA in Napocor’s 600-megawatt (MW) Calaca power plant and Tiwi-Makban geothermal facilities.  Napocor’s San Roque multi-purpose and Ilijan power plants are also included in JBIC’s international financial accounts.

About 80 percent of Napocor loans are accounted for multilateral debts. About 37 percent of this accounts for yen-denominated loans.