The National Power Corp. (NPC) can draw funding from sources other than the universal charge for missionary electrification (UCME) to fulfill its mandate of energizing areas in the country which are not connected to the main grid.
This was the opinion of the Department of Justice (DOJ), according to Secretary Raphael Lotilla, secretary of the Department of Energy (DOE).
Lotilla said in a statement yesterday the DOJ’s 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 state-run firm’s financial position.
Lotilla said NPC’s current funds that are sourced from the UCME are not sufficient to support its current operation.
UCME is collected from all power consumers which is then spent to lower the cost of providing power to remote areas not connected to the main grid as well as to pay NPC’s debts among others.
The Energy Regulatory Commission recently approved an upward adjustment for the said rate and is now at P0.2228 per kilowatt hour (kWh), up by 12 percent from the previous P0.1989 per kWh.
The DOE said based on DOJ’s Opinion No. 20 Series of 2022 and dated Sept. 23, 2022, the NPC has the legal authority 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 the Electric Power Industry Reform Act of 2001 (EPIRA).
Section 70 of EPIRA states NPC 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.
At present, NPC, through SPUG, services 229 missionary areas throughout the Philippines, most of which have yet to attain a 24-hour electric power service.
Lotilla said the DOJ’s opinion would also enable the NPC to ramp up renewable energy sources in off-grid areas and improve island-wide transmission in major off-grid islands, particularly through public-private partnership arrangements.
Lotilla also assured that with the oversight agencies in the NPC board, necessary controls are in place under the EPIRA for the judicious use of the power to contract loans.
