Sunday, April 20, 2008 NEA cuts lending interest for power coops
IN AN apparent move to lower the power rates in the country, the Board of Administrators of the National Electrification Administration (NEA) has decided to reduce its lending interest rates.
Energy Secretary Angelo Reyes, who chaired the NEA Board of Administrators and its members, agreed to lower the interest rates for electric cooperatives (ECs).
From 10 percent, it was dropped to eight percent per annum for loans with two years repayment period and nine percent per annum for those within the three to 15 years payment terms.
"We saw the need to review our own current pricing taking into account all major cost components to determine whether a change in pricing is warranted, and to provide an updated loan pricing that is fair, reasonable and competitive with other financing institutions," said NEA administrator Edita Bueno.
Bueno added that results of research conducted by the agency indicated that the Bangko Sentral ng Pilipinas (BSP) reference rates dated March 6, 2008, showed that "the highest interest rate prevailing in the market is 9.71 percent while the lowest is 8.5 percent."
According to Bueno, this is the second time that the state-run electrification agency lowered its lending interest for its clientele ECs in just over a year.
She noted that in December 2006, the NEA Board also approved the paring down of the loan interest for ECs from 12 to 10 percent per annum, which took effect beginning January 2007 until this new revision.
The NEA Board's Credit and Risk Management Committee recommended the lowering of the agency's interest rate on loans aimed at helping the ECs, added Bueno.
"The review of NEA's current interest rate seeks to provide a more updated loan pricing in order for NEA to achieve both viable and profitable operation," she explained.
While the lending interest rates cutback will result in a P14 million reduction in the agency's interest income, Bueno said "still we are happy that we will be able to provide the ECs with lower financing costs which will serve as our goodwill to them for being dependable partners in implementing the Rural Electrification Program and the Electric Power Industry Reform Act (Epira). This will also mean more loan availments and, therefore, sustainability of NEA's viability."
The lowering of NEA's lending interest rate is in keeping with Section 58 of Epira, which mandates NEA to assist the ECs to become financially viable and globally competitive in a deregulated power industry. (MSN/Sunnex)
