National Grid Corp willing to prepay concession cost

MANILA, Philippines - The National Grid Corp. of the Philippines (NGCP), the operator of the country’s transmission highway, is willing to prepay its concession cost to ease up the impact of the universal charge (UC), an NGCP official said.

NGCP spokesperson Cynthia Alabanza said there is no prohibition in the concession contract to allow the concessionaire to prepay its concession contract.

“The concession agreement is silent on prepayment. It will be by contract, it can be through a financial institution or through NGCP,” she said.

Alabanza said whatever the decision of the government on the prepayment scheme being proposed by the Power Sector Assets and Liabilities Management Corp. (PSALM) with NGCP will be consistent with the existing concession contract.

Established on June 26, 2001 by virtue of Republic Act 9136 or the Electric Power Industry Reform Act of 2001 (EPIRA), PSALM was created to primarily manage the privatization of assets and the liquidation of liabilities of state utility National Power Corp. (Napocor).

She said the concessionaire will also carefully study the impact of such prepayment on its operations.

“If NGCP will agree for a prepayment, I’m sure the finance people will have studied it well enough and certainly if there will be prepayment – it’s financial implication will not be at the expense of the capital expenditure. Remember, we have a capital expenditure budget that needs to be spent for any given regulatory period. Any arrangement for prepayment should not affect the prepayment,” she said.

According to Alabanza, as far as she is concerned, there is still no formal negotiations between NGCP and PSALM on this proposed scheme.

“There are no official negotiations on any prepayment between NGCP and PSALM. It could be partial or complete but right now there are none. They will not sell the concession but what they will sell is only the proceeds. It’s really a financing strategy,” she said.

Sources, however, said this prepayment of the National Transmission Corp. (TransCo)’s privatization proceeds has already been proposed even before the previous administration but the talks did not prosper.

Recently, PSALM has sought the approval of the Energy Regulatory Commission to collect a total of 39 centavos per kilowatthour (kWh) in a form of a UC to recover the Napocor’s stranded debts (SD) and stranded contract costs (SCC) incurred over the years.