By Danessa Rivera (The
Philippine Star) | Updated February 1, 2016 - 12:00am
MANILA, Philippines - Standard &
Poor’s Ratings Services (S&P) has maintained its credit rating on state-run
National Power Corp. (Napocor).
The state-run agency enjoys a ‘BBB’
rating on long-term local and foreign currency ratings and ‘axA’ ASEAN scale
rating with a stable outlook from S&P.
The debt watcher said the rating
reflects that the country’s present rating, which is a notch above the minimum
investment grade, over the next two years.
It noted the rating is based on its
view of an “’almost certain’ likelihood of timely extraordinary support from
the government for the company in the event of financial distress.”
“We have therefore equalized the
ratings on the government-owned electricity provider with those on the
sovereign rating,” S&P said.
The assessment covered Napocor’s
“critical” role as the sole provider of electricity to off-grid areas, also
known as missionary areas.
“National Power is specifically tasked to
undertake missionary electrification, which we view as a key social policy
initiative of the government,” S&P said.
“The private sector is unlikely to
fill Napocor’s role because of the low returns in the business and the limited
market size,” it added.
And since Napocor is state-owned, there
is significant government control over key budgetary and strategic decisions,
it said.
Prior to the passage of Republic Act
9136 or the Electric Power Industry Reform Act (EPIRA) of 2001, Napocor used to
hold the monopoly over power generation and transmission.
Post EPIRA, the agency was mandated
to privatize its power assets and is now responsible for providing electricity
to areas not connected to the grid.
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