NGCP to prepay gov’t $2B

Manila Bulletin 
By Myrna M. Velasco 
Published: July 29, 2013 
The National Grid Corporation of the Philippines (NGCP) has advanced an offer to the Philippine government for it to prepay $1.0 billion to $2.0 billion of its remaining concession fees for the National Transmission Corporation (TransCo) assets.
The prepayment arrangement is currently under discussion with the Power Sector Assets and Liabilities Management Corporation (PSALM), NGCP president Henry T. Sy Jr. has confirmed.
“If we will help the government, we want to make sure that the amount of prepayment will be sizeable,” Sy said.
PSALM is the government-run entity which privatized TransCo on a 25-year concession arrangement. Concession fees are also being remitted to it on a biannual basis.
The principal amount for the concession fees stood at $3.95 billion, which was NGCP’s winning offer at the auction. PSALM though floated up to $5.87 billion more that it will supposedly receive from NGCP’s prepayment. Yet sources privy to the matter tipped off that the final reckoned amount “will be a lot less than that.”
Last year, PSALM president Emmanuel R. Ledesma Jr. indicated that NGCP’s remaining obligations on the concession fees stood at $2.7 billion.
NGCP special adviser to the president Joseph Ferdinand Dechavez noted that the details of the prepayment pact are still being fleshed out, including the required documentations that shall go with the process.
Parties previously indicated that the numbers being reconciled deal with some projects under construction (or PUCs) as well as the proceeds fetched from the sale of the sub-transmission assets.
Schedule 6 of the Concession Agreement provides that the adjustments must be done on the level of concession fees to be remitted – and based on the sale of the sub-transmission assets.
NGCP concurred on the earlier pronouncement by Ledesma that the prepayment deal may be finalized within the year.
PSALM reportedly is badly in need of tangible cash flowing into its coffers -- after more than three years of non-performance as all asset biddings it scheduled ended in failure.
Upon privatization, TransCo was turned over to NGCP in January 2009. The concession pact was anchored on the need to tap a private investor which can fund the expansion and massive uprating required for the country’s electric transmission backbone as the government cannot do it anymore due to dire financial resources.   source