PSALM seeks okay of $700-M bond issue
The Philippine Star
06/19/2006
The Power Sector Assets and Liabilities Management Corp. (PSALM) has sought the approval of the monetary authorities to issue $700 million worth of bonds to finance the funding requirement of the National Power Corp. (Napocor).
"We do have something programmed. We applied for $700 million, it would depend on the Department of Finance (DOF) if they would issue it all to us. The debt servicing requirement is close to what we’re borrowing. We’re applying the necessary approvals," PSALM president Nieves Osorio said.
Osorio said they do not know yet if they would have a one-time issue for the $700 million.
The PSALM official said they have been receiving positive feedbacks from investors. "We have been receiving calls from investors. They are very interested," she said.
While Napocor has managed to survive for the past five months without borrowing, PSALM would need to raise funds for an expected bullet payment of the state-run power generation’s loan amounting to $500 million scheduled this August.
Last year, the National Government, through the PSALM, borrowed at least $750 million for the financing requirement of Napocor.
Industry sources said that as of end-December 2005, Napocor posted a net income of about P5 billion based on unaudited financial report submitted to the Commission on Audit (COA).
Napocor president Cyril del Callar, meanwhile, said they expect to maintain a positive earnings performance this year.
"We are maintaining our prudent management in operating our plants. If we sustain this in 2006, then we will remain in the black," he said.
PSALM, created by Republic Act 9136 or Electric Power Industry Reform Act (EPIRA) of 2001, is tasked to handle the finances and privatization of Napocor.
The last time that Napocor recorded a net income was in 1997 posting earnings of P3.05 billion.
Napocor closed the year 2004 with a net loss of P29.9 billion, still a significant improvement over the 2003 figure of P117.02 billion.
The financial turnaround was attributed to improved fuel mix and the tariff adjustments given by the energy regulator. "They were able to get better prices for their fuels; and (has gotten) a rate adjustment — which is like after 10 years," Osorio said.
Napocor has implemented a number of stringent cost-cutting measures such as economic dispatch of its power plants which enabled the power firm to utilize cheaper fuel types like hydro, geothermal and natural gas, and a reduced utilization of oil and coal which are more expensive.
In 2005, Napocor’s interest expenses are projected to decline from P30.25 billion in 2004 to P22.64 billion in 2005 as a result of the National Government’s decision in 2004 to absorb some P200 billion of Napocor’s outstanding liabilities as mandated under the EPIRA.
Napocor had been able to fully implement an average 32.6-centavo per kilowatthour (kWh) rate adjustment.
The appreciation of the peso and sustained strong energy sales have also been able to contribute to the financial turnaround of the power company.
06/19/2006
The Power Sector Assets and Liabilities Management Corp. (PSALM) has sought the approval of the monetary authorities to issue $700 million worth of bonds to finance the funding requirement of the National Power Corp. (Napocor).
"We do have something programmed. We applied for $700 million, it would depend on the Department of Finance (DOF) if they would issue it all to us. The debt servicing requirement is close to what we’re borrowing. We’re applying the necessary approvals," PSALM president Nieves Osorio said.
Osorio said they do not know yet if they would have a one-time issue for the $700 million.
The PSALM official said they have been receiving positive feedbacks from investors. "We have been receiving calls from investors. They are very interested," she said.
While Napocor has managed to survive for the past five months without borrowing, PSALM would need to raise funds for an expected bullet payment of the state-run power generation’s loan amounting to $500 million scheduled this August.
Last year, the National Government, through the PSALM, borrowed at least $750 million for the financing requirement of Napocor.
Industry sources said that as of end-December 2005, Napocor posted a net income of about P5 billion based on unaudited financial report submitted to the Commission on Audit (COA).
Napocor president Cyril del Callar, meanwhile, said they expect to maintain a positive earnings performance this year.
"We are maintaining our prudent management in operating our plants. If we sustain this in 2006, then we will remain in the black," he said.
PSALM, created by Republic Act 9136 or Electric Power Industry Reform Act (EPIRA) of 2001, is tasked to handle the finances and privatization of Napocor.
The last time that Napocor recorded a net income was in 1997 posting earnings of P3.05 billion.
Napocor closed the year 2004 with a net loss of P29.9 billion, still a significant improvement over the 2003 figure of P117.02 billion.
The financial turnaround was attributed to improved fuel mix and the tariff adjustments given by the energy regulator. "They were able to get better prices for their fuels; and (has gotten) a rate adjustment — which is like after 10 years," Osorio said.
Napocor has implemented a number of stringent cost-cutting measures such as economic dispatch of its power plants which enabled the power firm to utilize cheaper fuel types like hydro, geothermal and natural gas, and a reduced utilization of oil and coal which are more expensive.
In 2005, Napocor’s interest expenses are projected to decline from P30.25 billion in 2004 to P22.64 billion in 2005 as a result of the National Government’s decision in 2004 to absorb some P200 billion of Napocor’s outstanding liabilities as mandated under the EPIRA.
Napocor had been able to fully implement an average 32.6-centavo per kilowatthour (kWh) rate adjustment.
The appreciation of the peso and sustained strong energy sales have also been able to contribute to the financial turnaround of the power company.
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