DOF nixes sovereign guarantee for PNOC-EDC

There will be no new sovereign guarantees for PNOC-Energy Development Corp. now that the company has been sold to private investors, a ranking Finance official said.

“We are not issuing new guarantees. This is a continuing guarantee,” Finance Undersecretary Jeremias Paul said in a recent interview.

He also said the government expects to collect between P1 billion to P1.8 billion by 2010 from the sovereign guarantee fee which the new owners of PNOC-EDC must pay. He said this was after the government decided to raise the fee to two percent and another 0.25 basis point every year thereafter from the existing one percent.

“This is the net present value [and] the bulk of it will be paid in 2010. After that will be minimal. Essentially, 80 percent of the loans will be paid by 2010,” Paul said.

Last month, the government successfully sold its remaining stake in PNOC-EDC for P58.5 billion, of which P47 billion went to the state coffers.

Red Vulcan Holdings Corp., a consortium led by First Gen Corp. of the Lopez Group, has bagged the government’s 60-percent stake in the country’s top geothermal firm.  The P58.5 billion winning bid exceeded government expectations. Originally, the Department of Finance expected to raise only P32 to P36 billion from the PNOC-EDC auction.

The country’s largest geothermal energy company has loans amounting to P24.75 billion.

The sale of PNOC-EDC allowed the government to record its highest ever monthly budget surplus in November of P54.1 billion, putting the budget surplus for the first 11 months of the year at P12.7 billion, against a shortfall of P55.1 billion last year. The targeted surplus for November was P2.725 billion.