Napocor won’t need to borrow this year

With the entry of $930 million proceeds from the sale of the Masinloc coal-fired power plant, the National Power Corp. (Napocor) will no longer need to borrow this year, Power Sector Assets and Liabilities Management Corp. (PSALM) president Jose Ibazeta said.

PSALM is mandated under the Electric Power Industry Reform Act of 2001 to handle the finances and privatization of Napocor.

“Napocor will not borrow this year. We have enough cash flow for the year,” he said.

But Ibazeta said though they do not intend to borrow for Napocor this year, they would still carry out the $2.4-billion restructuring loan program for the power firm.

PSALM has already restructured $174 million of Napocor’s loans and plans to have another $300 million in yen-denominated loans restructured within the year.

“We have to see if we will need to adjust our loan program for Napocor this year to take into consideration the debt restructuring that we are doing for the company,” he said.

Ibazeta said they are still discussing with its financial advisors when to hold the second tranche of the loan restructuring program.

“In two weekstime we will be able to finalize with our investment advisor when to proceed with the next $300 million. We hope to finalize our debt management program by that time,” Ibazeta said.

Last April 16, US-based AES made the full payment for its acquisition of the 600-megawatt (mw) Masinloc power facility in Zambales.

This enabled PSALM to raise a total of $1.4 billion in privatization proceeds to date. Last year, PSALM already sold $500 million worth of Napocor assets.

This year, Ibazeta said they expect privatization proceeds to reach $1.9 billion. All proceeds from the privatization of Napocor assets will be used for debt payments.

The PSALM board said the privatization level for this year will reach 70 percent from about 42 percent in 2007. PSALM said the privatization target will enable the country’s power industry to move closer to the era of open access and retail competition.

Open access and retail competition are programs under the Electric Power Industry Reform Act (EPIRA) which will allow consumers to choose where to source their electricity requirements. But the EPIRA mandates a privatization level of 70 percent of Napocor generating assets in Luzon and Visayas before these two programs kick in.

“The privatization of at least 70 percent of the total capacity of the generating assets of Napocor in Luzon and the Visayas is one of the remaining preconditions for the implementation of open access and retail competition,” it said.

Based on its approved timetable, PSALM said, it will sell the 225-mw Bataan thermal plant in May. This will be followed by the 289-mw Tiwi geothermal and 458.53-mw Makban geothermal plants in June. PSALM will also sell in June the 0.8-mw Amlan hydroelectric plant.

By July, the asset management firm will privatize the 146.5-mw Panay diesel and 22-mw Bohol diesel plants, and the 620-mw Limay diesel plant. The 192.5-mw Palinpinon geothermal plant is expected to be placed on the auction block by August this year.

By September, another geothermal facility, the 112.5-mw Tongonan geothermal plant will be auctioned off. The bidding for the 114-mw Iligan I and II diesel plants and the 150-mw Bacman Geothermal plant is scheduled on October. The 116-mw Subic diesel plant and the 108-MW Aplaya decommissioned and 22.3-mw General Santos decommissioned facilities will be sold in November and December, respectively.