Tuesday, July 15, 2008 Napocor aims for debt-free year
STATE-run National Power Corporation (Napocor) is optimistic that they would not be able to borrow this year to fund their projects and operations.
Cyril del Callar, president of Napocor said as of end June, the government-owned firm has not made any foreign and domestic borrowings to finance their operations, rehabilitation or maintenance works as well as their projects.
"We're still working with the internally- generated budget and in 2008. We didn't make any borrowings yet," del Callar said.
He said the company's financial standing remains good and they are hopeful that this will continue until December of this year.
"We're hopeful that we will not borrow until the end of this year," he added.
Just last month, Napocor prepaid about US$263 million or Y27.2 million of its Miyazawa loans.
The prepayment reduces Napocor's debt obligation and improved its debt to gross domestic product ratio from 31.39 percent in 2003 to 10.94 percent in 2007, as well as its debt to total government-owned and -controlled corporation (GOCC) debt ratio from 80.58 percent in 2003 to 57.15 percent in 2007.
The Y27.2 billion represents Tranche B of the Miyazawa yen-denominated loans extended in 1999 by the Japanese government to Napocor to finance a number of its transmission projects.
Earlier, Ferdinand Florendo, manager of Power Sector Assets and Liabilities Management Corporation (Psalm)'s Capital Markets and Risk Management Department, noted apart from savings on interest payments and guarantee fees, "the Miyazawa prepayment reduces Napocor's foreign exchange debt by four percent and increases the peso component of the debt currency mix to 13 percent from 11 percent.
"This improves National Power's liability profile by reducing the exposure of the company to foreign currency fluctuations," explained Florendo.
Last March, Psalm prepaid Y17.4 billion debts of Napocor to Direct Japan Bank of International Cooperation-Overseas Economic Cooperation Fund.
Added to the prepayment of the Miyazawa loans, Napocor's total debt has now been reduced by 5.6 percent.
Psalm targets to reduce National Power's debt by at least 28 percent in the next two years.
Jose Ibazeta, president of Psalm, said all proceeds to be raised from the privatization of Napocor assets will be used to settle both its foreign and domestic obligations.
As of July 10, total proceeds raised from the privatization already reached US$1.5 billion.
In 2006, Napocor's total debt stock reached P358.5 billion or US$7.4 billion but it was reduced and further reduced with the prepayment of its maturing loans.
Napocor's debt swelled in 1998 when it entered into generous purchase deals with independent power producers during the height of the power crisis ten years ago.
However, the company was able to recover three years ago after posting a net profit of P86 billion in 2005 brought about by foreign exchange gains, higher power charges and cost-cutting measures. (MSN/Sunnex)
