The Energy Regulatory Commission (ERC) has given its go-signal for the long-term loan procurement applied for by Visayan Electric Company Inc. (VECO), proceeds of which shall bankroll its capital expenditures for 2014 and 2015.
In its filing with the regulator, VECO noted that it has already been offered “a 10-year term loan of up to P2.0 billion from the Land Bank of the Philippines (LBP) at an indicative interest rate based on the corresponding Philippine Dealing System Treasury Fixing Rates (PDST-F) plus a spread of 110 basis points.”
The utility firm listed various major projects, as well as “residual” and “significant residual” projects which are due for implementation this 2014 and next year. The required funding hovers around P2.430 billion.
The ERC emphasized that some of the projects were already approved in VECO’s previous filing for annual revenue requirement (ARR) under performance based regulation.
But two are still pending for approval, namely: A force majeure project which necessitated the repair and installation of a 100-megavolt ampere transformer at a Cebu substation of the National Grid Corporation of the Philippines (NGCP) amounting to P28.159 million; and the capex projects for 2014-2015 costing P402.091 million.
In the application, the Cebu utility firm similarly sought that it be permitted “to mortgage, pledge or encumber any of its property to any creditor in connection with its authority to secure a long term-loan,” and such shall be done without adverse effect or be detrimental to the provision of electric service to its customers.
In its ruling, the ERC directed the utility firm to submit “breakdown of the actual amount of drawdowns received from the lender, including the dates of receipt thereof.”
VECO was similarly required to provide “amortization schedule showing the principal and interest payments of the loan and exchange rates at the time of the payment.”
“Upon completion of the projects, VECO is further directed to prepare a validation of the recording of the said assets and corresponding expenditures in its book of accounts,” the ERC order has noted.
Further, the utility firm has been ordered to “ensure that the contracting and procurement of the equipment, assets and services have been subjected to transparent and accepted industry procurement and purchasing practices to protect public interest.” source
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