RP to see first power privatization in 2002

RP to see first power privatization in 2002

MANILA (Reuters): The Philippines will likely see the first privatization of its power assets late next year should a key power bill pass Congress in a special session next week, Energy Secretary Jose Camacho said on Saturday.

Camacho added foreign investors are expected to be the main players bidding for the state-run National Power Corporation's (Napocor) assets as there are few local firms with enough financial capability to rehabilitate and operate these assets.

"Even if the bill will be passed...on Monday, we will not be selling the assets two weeks from now," Camacho said in a forum with foreign correspondents.

"I personally estimate a period of about 15 to 18 months from passage of the bill before the first set of privatization is likely to happen."

The Philippines has set a special session of Congress from Monday to Thursday next week to pass a key power bill aimed at privatizing debt-laden Napocor and restructuring the industry to bring down local power rates, among the highest in the region.

Officials have said the power reform bill is symbolic of the ability of President Gloria Macapagal Arroyo's administration to push for economic reforms.

Under the bill, Napocor would be split into several companies and sold off. Its power generation facilities will be auctioned off along with the operation of its transmission lines under a concession agreement.

A study by Credit Suisse First Boston last year placed the total value of Napocor's assets at around $4.5 to 5.0 billion.

However, Camacho said the valuation might change 18 months from now depending on the market condition at the time the government is ready to place its power assets on the auction block and the state of the local economy.

Camacho said the government will have to formulate the implementing rules and regulations of the power bill, draw up a privatization plan and then come up with bidding guidelines.

Camacho said one of the reasons why he was "very optimistic" of the bill's passage was because the convening congress would be made up of incumbent legislators and not the incoming.

"You would think that you would have natural allies on both sides -- the majority legislators then who are now opposition were the authors, were the main proponents of the bill and the then opposition who is now part of the administration," he said.

Arroyo became president after deposed leader Joseph Estrada was ousted by a popular revolt in January. Arroyo who was then vice-president, headed the opposition coalition in a country where presidents and vice-presidents are elected separately.

The House of Representatives, the less powerful of the two- chamber Congress, has already approved its own version of the key power bill. The Senate is expected to approve its version by Wednesday, political sources said.

A bicameral committee has been meeting in parallel to bridge the differences between the two chambers and a unified version is expected to be presented to the plenary session of the House and the Senate on Thursday for voting, they said.

Both chambers of congress adjourned on February 8 ahead of the May 14 congressional and local elections and were due to reconvene on June 4.