By MYRNA M. VELASCO
In line with the bid to transfer the outstanding liabilities of stateowned National Power Corporation (NPC) to successor-company Power Sector Assets and Liabilities Management Corporation (PSALM), the Japan Bank for International Cooperation (JBIC) is prodding government negotiators to put forward a strong measure that would honor the former’s commitment under the original loan covenants.
An energy official who is part of the negotiating team divulged that “keeping NPC’s commitment on repayment of loans as stipulated under original agreements was among the crucial conditions that the multilateral lenders have been very meticulous and particular about as far as the transfer of loans to PSALM are concerned.”
Aside from JBIC, it was noted that these are parallel concerns set forth by the Asian Development Bank (ADB) and World Bank.
The transfer of NPC assets and outstanding liabilities into special purpose vehicle PSALM has been mandated under the Electric Power Industry Reform Act; so the government can fastidiously institute reforms and restructuring process in the power sector.
In fact, JBIC has the biggest loan exposure to NPC; thus, its concern on honoring loan covenants is very much a valid issue that it brings to the negotiating table, according to energy officials.
It has been emphasized that all three multilateral lenders have been very particular about the “wordings of the agreement” being set for the debt transfer arrangement.
ADB, for one, has sounded off that they may go to the loan covenants line-by-line if need be, to assure that all provisions would be adhered to after the debt transfer.
PSALM has first secured the consent of the commercial lenders and bond holders, but until now, it has yet to hammer out remaining issues with the biggest NPC lenders.
It would be noted that the power industry reform law also mandated absorption of part of outstanding liabilities of NPC by the national government; and this becomes another serious matter that needs to be discussed with lenders since this also transfers the burden of loan repayment to the State.
The NG debt assumption was initially set at P200 billion; but proposals have been put forward earlier to increase this up to R500 billion.
It is not yet decided firmly if this needs to be pushed as amendment to the Electric Power Industry Reform Act (EPIRA) or if the Executive Branch has another legal way of doing it, so it gets implemented.
As early as two years ago, NPC creditors have already been prodding NG to come up with a categorical plan on the debt absorption plan; but until now, finance officials have not got beyond words as far as policy implementation is concerned.
The debt absorption is hinged on plans to put forth advance benefits to electricity consumers; initially in the form of the R0.30 per kilowatt Power Act Reduction which has been incorporated in the billings immediately after the effectivity of the law in 2001.
