Napocor can now borrow from local banks to fund electrification program in off-grid areas

State-owned National Power Corp. (Napocor) can now draw on funding sources other than the Universal Charge for Missionary Electrification (UCME) to energize the areas in the country which are not connected to the main grid.

Energy Secretary Raphael Lotilla said the Department of Justice (DOJ) has issued an opinion allowing Napocor to borrow funds or contract loans to fulfill its missionary electrification function in the off-grid areas pursuant to its charter and the mandate established under Section 70 of Republic Act No. 9136 or the Electric Power Industry Reform Act of 2001 (EPIRA).

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

“This underlines the efforts of [Napocor’s] board and management to ensure timely payments to new power providers (NPP),” he added.

Lotilla said the Department of Justice (DOJ) has issued an opinion allowing NPC to borrow funds or contract loans to fulfill its missionary electrification function in the off-grid areas pursuant to its charter and the mandate established under Section 70 of Republic Act No. 9136 or the Electric Power Industry Reform Act of 2001 (EPIRA).

Section 70 of the EPIRA states that Napocor shall remain as a national government-owned and-controlled corporation to perform the missionary electrification function through the Small Power Utilities Group (SPUG) and shall be responsible for providing power generation and its associated power delivery systems in areas that are not connected to the transmission system.

Napocor-SPUG is currently supplying two hundred 229 missionary areas, most of which have yet to attain a 24- hour electric power service.

Lotilla also said that this favorable Opinion would finally enable the Napocor to ramp up renewable energy sources in the off-grid areas and improve island-wide transmission in the major off-grid islands, particularly through Public-Private Partnership arrangements.

He also assured that with the oversight agencies in the NPC board led by the Secretary of Finance as Board Chairman and the DBM and the NEDA as members, the necessary controls are now in place under the EPIRA for the judicious use of the power to contract loans.

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