26 Feb 2007
The government, through the Power Sector Assets and Liabilities Management Corporation (PSALM), and the World Bank today (26 February 2007) formally signed a universal creditor's consent to the transfer of the debts and generation assets of National Power to PSALM and the transfer of the transmission assets of National Power to the National Transmission Corporation (TransCo), and by PSALM, the sale of the generation assets and, by way of concession, the transmission assets to investors.
The signing was held in simple ceremonies at the 6th floor of the Department of Finance (DOF) Building, Bangko Sentral ng Pilipinas Complex, Roxas Boulevard, Manila City.
Signatories for the Philippine government included DOF Secretary Gary Teves, PSALM president Nieves L. Osorio, National Power Corp. president Cyril C. Del Callar, and TransCo project management officer-in-charge German C. Saldon. Philippines Country Director Joachim von Amsberg signed on behalf of the World Bank. Energy undersecretary Melinda L. Ocampo, who represented Energy Secretary Raphael P.M. Lotilla, witnessed the signing.
"The World Bank supports the Philippine government in pushing forward the reforms stipulated in the Electric Power Industry Reform Act (EPIRA) - the privatization of the generation and transmission assets and the restructuring of the power sector for the benefit of the Filipino consumers. We hope that this consent will send a positive signal to both domestic and foreign investors interested in acquiring the assets of National Power," said Mr. Von Amsberg.
"Should the government desire, the World Bank would be prepared to consider assistance to facilitate [the] successful implementation of the TransCo concession, which may include such options as World Bank and Multilateral Investment Guarantee Agency (MIGA) risk-mitigation instruments and long-term financing to the winning bidder from the International Finance Corporation (IFC- the private sector arm of the World Bank Group)," he added.
"Our quest to institute reforms in the Philippine power industry has taken another propitious turn, thanks to the World Bank which has given its consent to the transfer of the debts and generation assets of National Power to PSALM and the transfer of transmission assets of National Power to TransCo, and by PSALM, the sale of the generation assets, and by way of concession, the transmission assets to investors" said Secretary Teves. "The support extended by the World Bank to the Philippine government manifests its confidence in our capability to accomplish the intricate and gargantuan task of restructuring and privatizing the power industry."
Mr. Teves pointed out that the signing was significant since "it would require greater responsibility from all the parties concerned. It requires maintaining transparency and integrity in the privatization procedures to ensure the success of the whole process."
"Today's event brings PSALM another step closer to its objective of getting the universal consent of the multilateral creditors in its earnest efforts to speed up the privatization of the generation assets of National Power," said Ms. Osorio. "The signing of the World Bank consent will substantially boost the government's privatization efforts as universal consent will impact on the attractiveness of the generation assets and facilitate the transfer of the power assets successfully bid out to the new private owners."
Secretary Lotilla sees the signing of the World Bank consent as another milestone in the implementation of the EPIRA.
"The Department of Energy sincerely appreciates and thanks the World Bank for providing us the much-awaited universal consent to the transfer of the debts and generation assets of National Power to PSALM and the transfer of transmission assets of National Power to TransCo, and by PSALM, the sale of the generation assets, and by way of concession, the transmission assets to investors" Mr. Lotilla said. "This consent serves as a positive signal to both domestic and foreign investors interested in acquiring the assets of National Power that the World Bank is one with the Philippine government in pushing forward the reforms stipulated in the EPIRA - the privatization of these assets and the restructuring of the power sector for the benefit of the Filipino consumer."
The amended loan agreements provide the terms and conditions for WB-International Bank for Reconstruction and Development (WB-IBRD) consent to the transfer of National Power debts and generation assets to PSALM and the transmission assets to TransCo as provided for by the EPIRA. The Project Agreement requires TransCo to commit to the objectives of the projects funded by the loan agreements. The Agreement Amending the Guarantee Agreement ensures that the government guarantee on the original loan agreements will remain effective after the transfer of National Power's debts to PSALM.
The World Bank is the second major creditor after the Asian Development Bank (ADB) to give its universal consent to the transfer of debts and generation assets of National Power to PSALM and the transfer of transmission assets of National Power to TransCo, and by PSALM, the sale of the generation assets, and by way of concession, the transmission assets to investors.
On 03 March 2006, the Omnibus Amendment Agreement (OAA) was signed between the ADB and the government, providing ADB's consent to the transfer of the assets of National Power to PSALM and TransCo, and the assumption by PSALM of all loan obligations of National Power with the ADB. The OAA amended all loan agreements between ADB and National Power to reflect these consents.
Discussions with the Japan Bank for International Cooperation for its own universal approval to the asset and debt transfer are still ongoing.
Without the universal or omnibus consents, PSALM seeks specific creditor consents for each plant it successfully bids out. The most recent specific consent that PSALM received was for the sale of the 112-megawatt (MW) Pantabangan-Masiway hydro plant which was turned over to First Generation Hydropower Corp. in November 2006. PSALM is currently working on the specific consent for the 360-MW Magat hydro plant which it successfully bid out in December 2006 and awarded to SN Aboitiz Power in January 2007.
On 29 January 2007, PSALM received the clearance from the Inter-agency Committee for the Review of Foreign Loan documents on three agreements which amended the original loan agreements of National Power with the WB-IBRD.
Strategic Communications and Partnership Division |