Napocor clearance to borrow seen facilitating off-grid PPPs

By Ashley Erika O. Jose – September 26, 2022 | 7:44 pm
from Business World

THE National Power Corp. (Napocor) is authorized to debt-finance its missionary electrification program, including the cost of diesel, which has been rising due to the global fuel crisis, the Energy department said on Monday, citing a legal opinion from the Justice department.

The authorization to resort to debt financing is also expected to facilitate the establishment of renewable energy facilities in remote areas and island-wide transmission in major off-grid islands through public-private partnerships (PPPs), Energy Secretary Raphael P.M. Lotilla said. 

In a statement, Mr. Lotilla said that the Department of Justice (DoJ) opinion allows Napocor to tap financing other than the Universal Charge for Missionary Electrification (UCME) to electrify off-grid areas.

“The favorable opinion will allow the NPC to establish a credit line with banks that would enable it to manage the fuel price increase that has significantly affected the NPC’s financial position. The funds sourced from the UCME are not sufficient to support NPC’s current operation,” Mr. Lotilla said.

Napocor’s mandate in Republic Act 9136 or Electric Power Industry Reform Act of 2001 (EPIRA) is to provide power to so-called “missionary” markets which are off-grid, or not connected to the transmission system.

Napocor manages the transmission systems of Palawan, Masbate, Marinduque, Catanduanes, and Oriental and Occidental Mindoro.  

Under EPIRA, UCME is collected from on-grid electricity end-users to fund Napocor’s missionary electrification programs and projects. As of Aug. 30, the UCME rate is P0.1800 per kilowatt hour.

“The oversight agencies in the NPC Board led by the Secretary of Finance as Board Chairman and the DBM and the NEDA as members (means that) the necessary controls are now in place under the EPIRA for the judicious use of the power to contract loans,” he said.

On Sept. 1, Mr. Lotilla said at a budget briefing for the House Committee on Appropriations that the DoE is seeking authority for Napocor to take on credit lines from banks.

“Right now, it (Napocor) cannot even avail of that because of the DoJ opinion issued in the past. We will try to remedy all of those because as an operating corporation, you cannot do without a credit line at all,” Mr. Lotilla said.