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By Euan Paulo C. Añonuevo, Reporter
STATE-RUN National Electrification
Administration (NEA) cut its lending rates for electric cooperatives
to reflect recent market developments and help the utilities improve
their operations.
Edita Bueno, NEA administrator, said the
agency’s board unanimously approved the reduction from 10 percent
to 8 percent a year for two-year loans, and to 9 percent a year for
3- to 15-year borrowings.
She said the adjustment was a result of a study
conducted by the agency, which sought to update its financing
schemes for cooperatives in rural areas.
Its study showed that based on the Bangko
Sentral ng Pilipinas reference rates dated March 6, 2008, the
highest interest rate prevailing in the market was 9.71 percent
while the lowest stood at 8.5 percent.
“We saw the need to review our own current
pricing taking into account all major cost components to determine
whether a change in pricing is warranted, and to provide an updated
loan pricing that is fair, reasonable and competitive with other
financing institutions,” Bueno said.
This is the second time the agency lowered its
lending rates in just over a year.
In December 2006, the NEA Board also approved a
cut in the rate from 12 percent to 10 percent, which took effect
beginning January last year until this new revision.
However, NEA’s move will come at a price as
the agency will have to absorb a P14-million reduction in interest
income as a result of the reduction.
Despite this, the agency would still benefit by
providing cooperatives with lower financing costs, which “will
also mean more loan availments and, therefore, NEA’s viability,”
Bueno said.
She said the cuts are in keeping with Section 58
of the Electric Power Industry Reform Act of 2001, which directs the
agency to help cooperatives become financially viable and globally
competitive entities.
These cooperatives have been plagued by both
financial and technical woes that have kept a number of them from
effectively participating in a deregulated power industry.
The Asian Development Bank earlier found that
the credit worthiness of the cooperatives has been one of the
factors damping private investors’ appetite for government’s
power plant sale.
At the same time, the cooperatives have been
unable to participate in the mandated bidding for the National
Transmission Corp.’s subtransmission assets because they do not
have the technical and financial capacity.
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