Napocor eyes fresh P10 billion credit facility

MANILA, Philippines — State-run National Power Corp. (Napocor) hopes to borrow P10 billion from the Land Bank of the Philippines (Landbank) to ensure the continued delivery of power supply in off-grid areas.

“The loan has not been approved, but we already asked for the monetary board approval and are beginning to apply for the sovereign guarantee for the loan,” Napocor president and CEO Fernando Martin Roxas said.

Roxas said Napocor is hoping to get the loan by August or September this year.

“That will be enough to buy all the fuel that we need,” he said.

Napocor last year warned of potential widespread power outages occurring in missionary areas covered by small power utilities groups (SPUG) this year due to the shutdown of diesel plants and their inability to pay fuel suppliers.

Due to the higher cost of fuel, which is used by SPUG power plants, Napocor said that its approved and allocated funds for fuel expenses and subsidies for new power providers and qualified third parties for 2023 are insufficient to cover the requirements for the entire year.

As a result, Napocor earlier proposed a reduction of SPUG power plants’ operating hours to extend fuel inventory up to the end of the year.

However, it said there would be no reduction in SPUG power plants’ operating hours provided that they would have a budget augmentation to procure additional fuel that could last up to Dec. 31.

“The rationing will not push through anymore because we are able to borrow. We’ve been able to borrow P5 billion already. We will add an additional P10 billion,” Roxas said.

The Department of Energy wants Napocor to have access to credit lines of banks, with Energy Secretary Raphael Lotilla emphasizing that as an operating corporation, Napocor cannot do without a credit line at all.

DOJ, in an opinion in September last year, indicated that Napocor is allowed to draw on funding sources other than the universal charge for missionary electrification to fulfill its mandate of energizing the areas in the country that are not connected to the main grid and ensure a stable and reliable power supply in these areas.

The DOJ opinion stated that Napocor has the legal authority to borrow funds or contract loans to fulfill its missionary electrification function in the off-grid areas pursuant to its charter and the mandate established under Section 70 of Republic Act   9136 or the Electric Power Industry Reform Act of 2001.

The favorable opinion will allow Napocor to establish a credit line with local banks, allowing it to manage the fuel price increase that has significantly affected Napocor’s financial position.

Napocor, as mandated by the Electric Power Industry Reform Act of 2001, is tasked to perform missionary electrification in the farthest communities and islands not connected to the main grid.

It is in this capacity that the corporation operates 281 SPUG plants in 189 municipalities across 35 provinces in the country.

With the help of the Department of Energy and other concerned government agencies, Napocor has been pursuing measures to bridge its funding gap and ensure the uninterrupted delivery of power services in far-flung islands and villages.

Napocor is also working on its long-term sustainability plan to mitigate the impact of high fuel prices on its operations.

Part of the plan is the accelerated hybridization of SPUG power plants with renewable energy resources.

To expedite the deployment of renewable energy in its service areas, Napocor is looking to work with the private sector through public-private partnership arrangements.

Roxas is targeting to convert all SPUG areas to 100 percent renewable energy operations on or before 2030.