Manila defers Napocor Transco roadshow


Napocor power plants across the country have been the subject of protests by Greenpeace activists over toxic waste

Staff and wire reports

MANILA, Philippines -- The Philippine government has deferred the marketing roadshow for the transmission assets of state-run National Power Corp (Napocor).

It says there are still numerous requirements that have to be completed before the sale can go ahead.

Energy Secretary Vincent Perez told reporters Tuesday the government has decided to shelve the marketing of Napocor's National Transmission Company (Transco), saying there are "plenty of things to do".

Perez said these included a need to prepare a development plan for the transmission sector, and for the Energy Regulatory Commission (ERC) to review the unbundling of Napocor's rates and tariffs.

The Joint Congressional Power Committee has also yet to endorse the privatization plan for Transco, which Perez hopes Congress could finish before it adjourns at the end of the week.

The sale of the transmission assets is part of the government's program to privatize Napocor and raise around $2 billion for the cash-strapped firm.

In a bind

But the congressional body is in a bind as to how to implement a plan for the sale of the transmission assets, the Philippine BusinessWorld daily reported.

The report said the privatization arm of Napocor, the Power Sector Assets and Liabilities Management Corp (PSALM) has opted for a sale through a concession mode, saying it is more advantageous to the government than the outright sale of shares.

This mode requires the winning bidder to operate Transco. But to do this, the winner must first hold a legislative franchise to operate a power transmission company.

That means Congress needs to amend the power law and authorize the grant or transfer of franchise.

This process usually takes a long time, which could ruin the government's plan to sell the transmission assets by June or July, and delay the privatization of Napocor.

But unless the government provides a clear path on how to grant or transfer a franchise, potential buyers would be discouraged from entering the deal.

No bond float

Perez also ruled out tapping global bond markets, saying Napocor could wait until its transmission assets are sold.

"If necessary, we may have to tap the (bond) market. We'll decide on that. But it could come later in the year," he said.

He added Napocor may not even have to borrow money, so long as its needs are met by the asset sales.

"We borrowed already most of what we want," he told reporters.

Napocor withdrew a planned $400 million to $500 million seven-year bond issue in late January due to poor market conditions.

Instead, the power firm secured loans worth $750 million from the national government, which floated sovereign bonds to fund its own needs as well as Napocor's.

Napocor's 2002 foreign debt financing requirement is $1.5 billion.

The firm's debt load ballooned to 109.5 billion pesos (about $2.1 billion) by the end of last year, up 6.16 percent from a year earlier.