25 January 2007
Is there really a need for the National Power Corporation (Napocor) to give P2.6 billion to the National Government or it needs the money more than the government?
The National Power Corporation (Napocor), although it posted P86 billion net earnings in 2005 – the only positive gains in the past ten years and allegedly the highest so far in the past seventy years –, incurred losses again in 2006. In its first six months last year alone, it had a net loss of P8.32 billion and an estimated net loss of some P50 billion by end that year if peso continued to depreciate and could be due to price manipulation at the wholesale electricity spot market. The $500 million bonds it floated last year and the $450 million fresh loan from the Asian Development Bank further illustrated Napocor’s dire financial position as it needed additional funds to pay off its long-term debts amounting to almost P400 billion as of end-2005. Its total debts and liabilities already stood at about P1.3 trillion that year – equivalent to about twenty-five percent of the total NG debt as of June 2006 amounting to P4 trillion.
Napocor has been the single highest contributor to the NG debt because of its huge long-term debts and liabilities. But when in had recovered, the government wanted to claim its dividends immediately even when trends last year had indicated that the positive gains in 2005 was shortlived.
The Freedom from Debt Coalition is thus puzzled that with the sorry fiscal position of Napocor, the government still collected from it dividends amounting to P2.6 billion. Mrs. Gloria M. Arroyo even had to issue Executive Order 599 on 18 January 2007 adjusting the dividend rate of Napocor on its net earnings in 2005 to three percent (3%). The losses incurred and the strings of borrowings by Napocor last year including the planned borrowings this year only show that the power company needs money and whatever gains it had in 2005 cannot be sustained.
Instead of remitting the P2.6 billion to the National Government, Napocor could use the earnings to reduce its debts, either interest or debt stock. However, FDC still maintains that all debts should still be scrutinized and eliminate the onerous ones from the list of accounts to be paid.
Napocor’s borrowings are guaranteed by the national government. In the event it fails to meet its obligations, the government assumes the responsibility of paying these off. This could mean additional debt burden to the Filipino people.
We cannot help but wonder why given the dire need for additional funds by Napocor, the government was still interested in getting the dividends from the state-owned power corporation, and was collected only a year after the power company posted its only positive gains. Why only now?
EO 599 states that the dividends will be collected in the interest of national economy and general welfare. But, the government itself boasts that it has already attained a “rosy” fiscal and economic situation. Then why does it still need to get money from the debt-ridden Napocor that has been continuously borrowing to service its maturing financial obligations? Where will the government use the money?
Again, in the context of unresolved misuse of government resources and scandals that have plagued the Arroyo Administration, the use of these extraordinary dividends from a debt-ridden agency can only lead to strong suspicion that the fund maybe used for election-related activities.