NGCP readies $2-b prepayment to govt

Manila Standard Today
By Alena Mae S. Flores | Posted on Jul. 29, 2013 at 12:02am 

National Grid Corp. of the Philippines, operator of the country’s major power transmission lines, plans to issue corporate notes to raise funds and prepay $1 billion to $2 billion in concession fees to the government, a top executive said over the weekend.

National Grid president Henry Sy Jr. told reporters the advance payment would help Power Sector Assets and Liabilities Management Corp., the government agency tasked to privatize power assets, to ease its financial burden.

Sy said National Grid was looking at financing options for the prepayment of concession fees, which it aimed to complete within the year.  He said the financing options might include the issuance of corporate notes to fund the prepayment.

“Nowadays, you don’t have to issue bonds, [but] corporate notes only,” Sy said.

The range of the remaining outstanding concession fees is about $2.6 billion, which are to be paid within 25 years, but the government asked National Grid to prepay the concession fee because of budget constraints.

National Grid senior adviser to the president Joseph Ferdinand Dechavez said once the company had completed the documentation and certain terms were agreed upon with PSALM, the prepayment could proceed.

“We are voluntarily offering to the government.  If we can get financing, we will do prepayment. That is our offer to them and I think they are considering,” Dechavez said.

He said National Grid needed to borrow to raise the $1 billion to $2 billion for prepayment.

“We borrow money separately, because it cannot affect the operations of NGCP. We’ll just have to accommodate [the interest from the loan] because we just want to help the government,” Dechavez said.

“If we want to help the government, it should be a sizeable [amount]. If we want to help the government, it should be substantial.  $1 billion to $2 billion should be the range,” he said.

PSALM president Emmanuel Ledesma Jr. earlier said there was “just one more issue” to be ironed out that would result in the conclusion of the prepayment agreement.

“I’d rather not discuss in detail but there’s just one more issue,” Ledesma said.

PSALM set a funding requirement of P60 billion this year, after taking into account the scheduled privatization payment and the projected operations of power plants.                The agency, however, has not privatized any power asset this year.

PSALM’s total debt and lease obligation to independent power producers as of September 2012 reached P640 billion ($15.28 billion).  The amount included P328 billion ($7.85 billion) in debts and P311 billion ($7.43 billion) in IPP lease obligations.

The Energy Regulatory approved PSALM’s petition to recover the stranded contract costs of Napocor from 2007 to 2010 early this year.   source