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Interview

Ma Gladys Cruz-Santa Rita, President & CEO, National Power Corporation (NPC), Philippines

Ma Gladys Cruz-Santa Rita, the newly appointed president of Napocor, outlines her vision for the corporation going forward and emphasizes the need for financial stabilization, explaining recent policy shifts with regard to collection efficiency and the disconnection of delinquent accounts. Furthermore, she points out why advancements in clean energy provision will be fundamental to attaining the government’s rural electrification targets.

 

What is the mandate of the National Power Cooperation, and how has it evolved since the reform of the power industry in 2001?

The National Power Corporation (NPC) is a government-owned and controlled company that builds and operates nuclear, hydroelectric, and thermal power generation facilities, and works with independent producers under build-operate-transfer programs. It is headquartered in Quezon City and employs more than 4,000 people.

The Electric Power Industry Reform Act (EPIRA) of 2001 dramatically changed the Filipino energy landscape. The NPC is no longer the same corporate entity, with the EPIRA mandating the privatization of its generation and transmission assets, except for those necessary for missionary electrification. The transmission assets held by the NPC were transferred by EPIRA to the National Transmission Corporation (TransCo); the operation, maintenance and upgrade of assets were privatized by way of concession contract undertaken by the Power Sector Assets and Liabilities Management Corporation (PSALM).

Today, the NPC generates electricity from its own facilities and from Independent Power Producers (IPPs) under long-term off-take agreements. The capacity produced by IPPs is also in the process of being privatized and assigned to IPP administrators trading on behalf of the NPC.

The NPC currently covers 36 out of 80 provinces in the Philippines and follows five different mandates: the missionary electrification, which includes off-grid plants (which are common, given the 7,107 islands that comprise this country); dams and watershed management, which are very relevant in the Philippines power sector as the country has huge hydro power plants; renewable sources; to continue managing indisposed assets, and to privatize the remaining assets.

It must be a particular challenge to provide uninterrupted electricity in off-grid and rural areas, especially when some consumers do not pay their bills. There has been a recent shift in policy regarding disconnection for non-payment. What are you expecting to achieve with this policy shift?

A priority concern for the NPC today is the policy of disconnection for delinquent accounts in areas covered by Napocor’s Small Power Utilities Group (NPC-SPUG): during my first week in office, two disconnections were carried out, which was a major change in policy. After the Albay ALECO disconnection, all the concerned parties, including local officials, are aware that disconnections are possible and they have to take payment seriously. We are determined to put our finances in order.

This was a departure from the previous practice, where Napocor’s policy on disconnection became subject to political pressure, resulting in inconsistent implementation of disconnection notices. I am willing to initiate a continuing dialogue with the electric cooperatives with whom we are servicing and touch base with local government executives to explain the need for payment of long overdue electric bills to Napocor. My priority to firmly enforce Napocor’s policy on disconnections is in line with another priority: the improvement of the corporation’s collection efficiency.

Is implementing tougher rules on disconnection the only aspect of the NPC’s policy to improve the corporation’s collection efficiency?

Corporate governance and government bureaucracy are two areas to be familiar with in order to be able to face a lot of the problems in the public utilities, as the problems are largely political in nature, and therefore require political solutions. With this in mind, we need to put an immediate stop to the corporation’s financial bleeding, and collect payments from the electric cooperatives (ECs). In an ideal world, we wanted to get the

ECs to pay their outstanding receivables from the first half of this year, as well as receive full payment of their outstanding bills. The reality is that we need to work with our customers and key stakeholders to come up with concrete, time-bound and workable solutions to address the current situation.

After I took over the position at the NPC, I discovered that 70 percent of the unpaid bills were coming from Vasilan, Sulu and Tawi-Tawi, all three of which are located in the Autonomous Region in Muslim Mindanao (ARMM). It is clear that a change of mindset is needed in this region, as the other 33 provinces will also suffer if these three refuse to pay their bills. The solution is to find investors in these regions that are interested not only in profit, but helping to develop these provinces.

What is the role of the NPC in implementing the DOE’s Rural Area Electrification Subsidy Program, which aims to improve the country’s current electrification rate of 89.7 percent?

The DOE’s Rural Area Electrification Subsidy Program integrates the rural and missionary electrification efforts of the government in collaboration with the private sector, non-government organizations, and several donor-funded projects, with the view to attaining the major goal of 90 percent household electrification by 2017. The NPC is responsible for providing power generation and its associated power delivery systems in areas that are not connected to the transmission grid. However, its assistance depends on availability of internal cash generation or the share of Missionary Electrification from the Universal Charge (UC-ME).

What will happen to the corporation when the Philippines reach 100 percent electrification rate?

Our responsibility with missionary electrification will continue for some time yet, because there are still a lot of areas where the private sector is not interested in being present. At the end of the day, the NPC will still be providing subsidies to non-profitable areas.

While electricity demand continues rising, what will the NPC’s role be in fueling the sustainable growth of the Philippines in the next five years?

The NPC is currently focused on planning the road energy map for the future. In the next five years we will be able to privatize some areas where there are interested private players. At the same time, we intend to become more renewable in our power sources: we hope that increasing the operating hours in our hydro and solar plants will help to achieve this.

I hope that in the future, we will be able to radically increase our levels of renewable power generation. Despite a relatively advanced renewable energy contribution, the Philippines has significant potential for further clean energy development and that is exactly what we will be working on.

 

To read more interviews and articles on the Philippines, and to download the latest free report on the country, click here.  

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