Government set to borrow $750 M — Villar

It seems that there’s no stopping the government’s borrowing spree despite the looming fiscal crisis and appeals from lawmakers and the public for a moratorium on new loans pending a congressional inquiry into the country’s debt stock.

Sen. Manuel Villar Jr., chairman of the Senate finance committee, said yesterday the national government is set to borrow an additional $750 million to $1 billion for the debt-laden National Power Corp. (Napocor), the biggest money loser among state firms.

"For what purpose would they use the money, we don’t know. They are not telling us. They are not even clear on how much they really need and how much they owe," he said.

He said Congress has no control over Napocor borrowings, and that it is Malacañang that can temper the state power firm’s borrowing binge.

"The sad part is that Napocor borrowings are assumed by the national government and are passed on to the public in terms of new taxes and increased electricity rates," lamented Villar.

Napocor’s accumulated loans are estimated at apporximately P600 billion. Additionally, the state firm owes between P600 billion and P700 billion to independent power producers.

Some P400 billion of that huge indebtedness would be assumed by the national government next year, according to Sen. Manuel Roxas II.

Roxas said yesterday he would oppose this unless there is "a clear and full accounting as to how the power firm ended being saddled with crippling liabilities, where the money went and why the government is now being asked to shoulder the repayment of such obligations."

"How did Napocor’s financial problems deteriorate? How did Napocor spend borrowed money over the years? Why is the national government now being asked to service these liabilities? What are the amounts involved? These questions beg answers," said the former trade secretary.

He said his former boss, President Arroyo, indicated that the government would assume P400 billion of Napocor’s debt in the budget documents she submitted to Congress.

"Indicating in official documents that the government would be assuming certain amounts of the debt liabilities sends the wrong signal, as it implies that government has already agreed to the idea. This is totally wrong on policy as well as market signaling considerations," he added.

He pointed out that based on the President’s budget submissions, she is seeking P36.7 billion for interest payments alone on Napocor liabilities that she wants the national government to underwrite.

Roxas also wants to find out where the P35 billion a year in additional revenues that the state power firm expects to earn from its recent rate increase would be spent.

Opposition Sen. Sergio Osmeña III said the government has no choice but to assume Napocor’s debt to clear the books and make the power firm easier to privatize.

Osmeña said no local or international lending institution wants to lend money to Napocor because of its inability to pay. "The Philippine government has to assume the loan ... because that is the only way the international lending institutions will allow the sale of Napocor," he said.

Last week, the Energy Regulatory Commission (ERC) allowed Napocor to increase its generation charge by 98 centavos per kilowatt-hour.

Lawmakers said this was just the first of three power rate hike installments that ERC would grant Napocor.

Testifying before the Senate ways and means committee Tuesday, Finance Undersecretary Nieves Osorio said she expects ERC to grant an additional P1 per kwh adjustment by December.

That expected increase would almost double the cost of electricity.

Finance Secretary Juanita Amatong however said it remains unclear how the additional revenues will impact on government’s move to assume certain liabilities of the debt-laden power firm.

While the government is set to assume P400 billion of Napocor’s debts, Amatong said the balance of around P200 billion can be raised through the privatization of its generating companies.

Meanwhile, organized labor yesterday demanded a full-blown investigation into reports that Napocor extended some P12 billion in retirement benefits to its top officials in recent years.

The Trade Union Congress of the Philippines (TUCP), the country’s largest trade union, said Congress and Malacañang should look into the "outrageously" large amount handed to retiring Napocor officials.

"While we are not against the granting of retirement benefits to deserving state employees, we are questioning the propriety of giving outrageously large amount at the expense of consumers and taxpayers," TUCP said in a statement.

TUCP issued the statement in reaction to reports that Napocor provided P12 billion in retirement pay to its officials despite the company’s being heavily in debt.

It is said that Napocor’s liabilities of P1.4 trillion represent nearly half or 42 percent of the P3.3 trillion national debt.

In a statement, Sen. Jose "Jinggoy" Estrada blamed Mrs. Arroyo’s former finance secretary Jose Isidro Camacho for the huge debt incurred by Napocor.

Estrada, son of the deposed president, said Camacho, a former official of Deutschbank, was apparently a congenital borrower, which plunged the country deeper into a debt hole.

He said Camacho should be summoned by the Senate to explain the fiscal crisis. — With Mayen Jaymalin, Jose Rodel Clapano