(Mostly excerpted from the Philippine Star, 05 May 2010)

       State-owned National Power Corporation (NAPOCOR) will offer about P15 billion worth of peso-denominated bonds within the month.

       "I think we want it in place within the month," NAPOCOR president Froilan Tampinco said. Tampinco said they would use the proceeds from the bond offer to fund their budget requirement for the rest of the year and up to the first quarter of next year. He said they are still determining if they will offer the bonds to retail and institutional investors. Right now, the company is firming up talks with various financial institutions for the bond offering.

       "We're negotiating with Landbank (of the Philippines) as arranger. There are initial talks with Landbank but ANZ Bank may also come into the picture and of course DBP and PNB," Tampinco said.

       Early this year, NAPOCOR revived its plan to issue these bonds as it sees the need to raise funds to continuously support its Small Power Utilities Group (SPUG) projects in the pipeline. Earlier, NAPOCOR set aside the issuance of its bonds worth P7 billion after it had successfully held a P4-billion bridge financing.

       Under the Electric Power Industry Reform Act (EPIRA), NAPOCOR will have to privatize its power plants. After the privatization of its power facilities, NAPOCOR would be left with the function of operating the SPUG and those power plants that will not be sold by the Power Sector Assets and Liabilities Management Corporation (PSALM), an entity created under the EPIRA to dispose of the NAPOCOR assets.

       He said if the plan pushes through, the company would issue five to 10 year bonds. The NAPOCOR chief also earlier said that they are still studying if they need to raise the entire P15 billion requirement since they have a pending petition to collect Universal Charge from its customers.

       The Universal Charge is a non-bypassable charge imposed from all electricity end-users for purposes stipulated in the EPIRA - one of which is Missionary Electrification.

       "The amount we're applying for amounts to P17 billion for 2009 to 2018 or translating to 30 centavos per kilowatt-hour.But it's still an application and is still waiting the ERC's approval," Tampinco said.

       EPIRA mandates that funds for the operations of SPUG shall come from the revenues from sales in the Missionary Areasand from the Universal Charge for Missionary Electrification as determined by ERC.

       NAPOCOR's SPUG takes a leading role in planning the power development in the Missionary Areas. It assesses requirements and prospects for Missionary Electrification , including the program for Private Sector Participation (PSP). It also acts as the petitioner and local administrator of the Universal Charge for Missionary Electrification.

       Missionary Electrification is funded from revenues of the sales to customers in the SPUG areas and Universal Charge collected from all electricity end-users as determined by the Energy Regulatory Commission (ERC).

       The advances made by NAPOCOR usually come from revenues from its main grid assets. However, with the turnover of assets to winning private bidders and transferred to PSALM prior to privatization, NAPOCOR's capability to provide advances for Missionary Electrification is significantly diminished.

       The SPUG operates 412 generating units with a total generated capacity of 236.67 MW. It serves 152 island grids and eight isolated grids providing electricity to 47 customers consisting of 40 electric cooperatives and 7 local government units (LGUs). Its operation includes a hydroelectric plant and a hybrid wind turbine farm.