RP faces $10 billion in power company debts<\/p>\n
MANILA, Philippines (AP): The Philippine government or
\nelectricity consumers will have to shoulder as much as US$10.5
\nbillion of liabilities after state-owned National Power Corp. is
\nprivatized, according to a report by Credit Suisse First Boston
\nCorp.<\/p>\n
Credit Suisse said its preliminary valuation of Napocor's
\nassets and estimate of the present value of its financial debt
\nand power purchase agreements with various power companies
\nindicates \"a shortfall of privatization proceeds against
\nliabilities of between $9.5 billion and $10.5 billion.\"<\/p>\n
\"This gap will have to be directly borne by the government or
\nby consumers through some form of transition charge added to the
\nwholesale market price of electricity,\" Credit Suisse said.<\/p>\n
Credit Suisse and SGV\/Andersen Consulting were retained as
\nadvisers for Napocor's privatization, which is seen as a
\nprecondition for balancing the government's budget, restoring
\ninvestor confidence in the Philippines, opening of the energy
\nsector to foreign investment, and assuring adequate energy
\nsupplies over the next decade.<\/p>\n
The advisers drew several scenarios for handling these
\n\"stranded liabilities\" on energy prices, including passing on the
\ncosts to consumers over a 10-year to 25-year period. They said,
\nhowever, that the \"allocation of this burden between taxpayers
\nand consumers is a political decision\" beyond their mandate.<\/p>\n
The advisers estimate Napocor's liabilities at $15.77 billion,
\nexcluding interest payments and undrawn loans from the Asian
\nDevelopment Bank and the World Bank.<\/p>\n
Power purchase agreement obligations, net of revenues derived
\nfrom energy sales, account for around $9 billion of Napocor's
\nliabilities, they said.<\/p>\n
Privatization proceeds, meantime, are estimated at between
\n$4.5 billion and $5.2 billion, with as much as $2.7 billion
\ncoming from transmission assets, the advisers said.<\/p>\n
The advisers estimated an additional $590 million to $700
\nmillion can be derived from the sale of Napocor's Tiwi-Makban
\ngeothermal plant, but noted that \"uncertainty regarding the
\nstatus of this asset prevents it from being included in the
\noverall valuation.\"<\/p>\n
Napocor is engaged in a contractual dispute with Tiwi-Makban
\noperator Philippine Geothermal Inc., a wholly owned unit of
\nUnocal Corp.<\/p>\n
The advisers also calculated \"the present value of future
\nancillary services revenues from generation companies\" at an
\nadditional $332 million.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/rp-faces-10-billion-in-power-company-debts-1447893297",
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