State-owned National Power Corp. (Napocor) may continue to stay away from the debt market this year amid cost-cutting measures implemented over the past years and given huge proceeds from privatization of its assets, a government source said during the weekend.
“Last year, we did not borrow. This year, we may not borrow also because of the privatization proceeds,” a source told reporters.
The official said this may be the second straight year that Napocor will not borrow from the debt market.
“We have implemented a lot of cost-cutting measures and we were able to sustain our financial profitability,” the source said.
Napocor’s Masinloc and Calaca plants have been sold last year for a combined amount of $1.7 billion.
The Power Sector Assets and Liabilities Management Corp. (PSALM), the agency tasked to sell government’s power assets, earlier said that it is set to prepay Napocor’s debts as part of its financial management.
The agency had said it would settle $1 to $1.3 billion in foreign-denominated loans this year, using the $600 million in proceeds it had raised in December.
Napocor is expected to remain in the black in 2007, sustaining its positive performance in 2006 and ending decades of being in the red.
The PSALM earlier said it is considering other finance structures such as swaps and options available in the international financial markets to maximize the use of proceeds from the power privatization program.
The agency plans to implement currency switching of some debts, since the agency has approval to refinance up to $2.4 billion in debts.
Data from the agency showed that 92 percent of Napocor’s debts are in foreign currencies. PSALM is eyeing to bring this down to at least 61 percent to minimize foreign exchange risk and exposure.