NATIONAL POWER CORPORATION

Table 1.2.a

NATIONAL POWER CORPORATION

CORPORATE OBJECTIVES AND PRIORITIES FOR FY 2003

I. CORPORATE OBJECTIVES

General Objectives

To maintain greater work efficiency in delivering quality and reliable power supply to the country directed towards a well-managed and world-class power generation system that is least costly and efficient, while ensuring that the privatization efforts of National Power Corporation yield the best interests for the government.

Specific Objectives

To provide competitive, reliable and efficient electricity by ensuring that the physical infrastructures are in place and remain in peak form to meet customer requirements and satisfaction.

To pursue missionary electrification and provide power generation and its associated power delivery systems in areas that are not connected to the transmission systems.

To safeguard the core business-generation as competitive segments to boost efficiency significantly.

To ensure that proper business systems are in place to achieve a more viable financial and technical performance.

To rationalize corporate investments to ensure that these are made for the best interest of the Corporation and recovered at a reasonable period.

To pursue a market price that is pro-consumer and one which will benefit the general public in line with government's pro-poor thrust.

II. CORPORATE PRIORITIES

A. Major Programs and Projects

1. Organization

Restructure NPC organization to continue its missionary electrification function and operate and maintain those generating assets that have not yet been privatized. With the passage of Republic Act 9136, otherwise known as the Electric Power Industry Reform Act of 2001, the generating assets of NPC shall be privatized.

2. Generation

Continue to enhance the utilization of its existing generation assets and improve efficiency of its plants through rehabilitation as in the case of Tiwi-Makban and Agus.

3. Small Power Utilities Group

Continue to perform its missionary electrification function through the Small Power Utilities Group (SPUG) and provide power generation and its associated power delivery systems in the areas that are not connected to the transmission system.

B. Physical Targets

1. To pursue capacity build-up and reliable power distribution, particularly improvements in generating performance by ensuring that power stations are well placed to meet the electricity needs of the country for the budget periods and onwards.

Generation Project 364 MW capacity addition

2. To undertake missionary-development programs for the islands, not only provide electrification to the islands but pave the way to making them viable investment areas; construction of 69kv transmission lines in the islands of Masbate and Marinduque; and assistance in the consolidation of the countryside electrification programs of government agencies.

Table 1.2.m

NATIONAL POWER CORPORATION

SPECIAL PROVISIONS, FY 2003

1. Budget Flexibility. The National Power Corporation (NPC) through its Board of Directors, is authorized to realign programs and projects and reallocate the corresponding budgetary requirements herein approved, as well as augment the requirements which may arise from factors beyond the Corporation’s control. These may include, but shall not be limited to the following:

a) Increase in oil/steam/coal/natural gas prices,

b) Currency depreciation,

c) Inflation,

d) Change in generation mix and demand, interest rates,

e) New loans/financing that may be contracted/sourced,

f) Substitute programs and projects,

g) Change in generation plan, purchased power program,

h) Program implementation and schedule and correction,

i) Transfer or elimination at NPC’s expense of projects or installations that are hazardous to the health or safety of inhabitants,

j) Reorganization, subsidiarization or privatization should conditions warrant, and

k) Implementation of projects intended to pursue expanded missionary function of Small Power Utilities Group (SPUG), to be funded from the levy to be collected pursuant to RA No. 9136, “The Electric Power Industry Reform Act (EPIRA)”.

PROVIDED, That augmentation funds shall not be used for the acquisition of motor vehicles and payment of travelling, representation and discretionary expenses: PROVIDED, FURTHER, That the Personal Services shall not be augmented by savings from Maintenance and Other Operating Expenses (MOOE) as well as Capital Outlays or by new funding source.

2. Augmentation Beyond Approved Corporate Operating Budget. The Corporation is hereby authorized to augment and disburse funds beyond the total amount approved in this Act for the following:

a) Fuel, purchased power and debt service: PROVIDED, That such are the effect of the peso devaluation and increase in production costs beyond NPC’s control: PROVIDED, FURTHER, That the amount to be disbursed shall come from corporate funds/borrowings.

b) Payment of separation benefits of NPC employees separated pursuant to the EPIRA: PROVIDED, That the amount shall not exceed the authorized level provided for the purpose in the approved COB for the Corporation under RA 9162, net of any payments made in CY 2002.

3. Authority to Transfer Budget. The NPC, upon effectivity of the deed of transfer between NPC and Power Sector Assets and Liabilities Management (PSALM) Corporation, shall transfer any portion of its budget relative to the transfer of generating assets and Independent Power Plants (IPPs) to PSALM. However, NPC may retain the final items/costs to enable it to continue operating the undisposed generating assets and IPP contracts of PSALM authorized under EPIRA.

4. Reportorial Requirement. A comprehensive financial and narrative report on the budgetary adjustments authorized under the preceding sections shall be submitted to the House Committee on Appropriations and the Senate Committee on Finance, including the Department of Budget and Management, within thirty (30) days after such adjustments are made.

5. Restriction on the Grant of New/Additional Compensation. No amount herein authorized shall be used to cover payment of new/additional cash compensation such as salaries and allowances, unless approved by the President of the Philippines: PROVIDED, That the grant of new/additional non-cash and other economic benefits shall be subject to existing laws, rules and regulations.

6. Staffing Requirements. The staffing pattern and personal services cost authorized herein shall be subject to adjustments upon the approval of a restructuring plan by the NPC Board pursuant to RA No. 9136 and confirmation by the President of the Philippines.

Table 1.2.b
NATIONAL POWER CORPORATION
ASSUMPTIONS, FY 2001-2003
						RATE
			GIGAWATTHOUR			% Inc (Dec)
			2001	2002	2003	2002/2001	2003/2002
1.	ENERGY SALES, GWH
	PHILIPPINES		39,948	40,134	40,924	0.46	1.97
		Luzon	30,367	29,344	29,575	(3.37)	0.79
		Visayas	3,753	4,464	4,478	18.94	0.31
		Mindanao	5,382	5,771	6,201	7.22	7.45
		Small Islands	446	555	670	24.44	20.72
			GIGAWATTHOUR			PERCENT MIX
			2001	2002	2003	2001	2002	2003
2.	ENERGY GENERATION, GWH
	PHILIPPINES		43,470	43,844	45,710	100	100	100
		Hydro	6,986	7,198	7,245	16	16	16
		Geothermal	10,572	11,797	10,787	24	27	24
		Coal	17,241	18,117	19,604	40	42	42
		Oil-Based	8,671	3,925	5,396	20	9	12
		Natural Gas	-	-	-	-	-	-
		Natural Gas	-	2,807	2,678	-	6	6
	LUZON		33,191	32,261	33,356	100	100	100
		Hydro	2,724	3,163	3,264	8	10	10
		Geothermal	6,500	7,191	6,103	20	22	18
		Coal	16,524	17,282	18,934	50	54	57
		Oil-Based	7,443	1,818	2,377	22	6	7
		Natural Gas				-	-	-
		Natural Gas	-	2,807	2,678	-	8	8
	VISAYAS		4,090	4,923	4,935	100	100	100
		Hydro	9	13	13	-	-	-
		Geothermal	3,267	3,818	3,896	80	78	79
		Coal	717	835	670	18	17	14
		Oil-Based	97	257	356	2	5	7
		Natural Gas				-	-	-
	MINDANAO		5,704	6,086	6,634	100	100	100
		Hydro	4,246	4,016	3,958	75	66	60
		Geothermal	805	788	788	14	13	12
		Oil-Based	653	1,282	1,888	11	21	28
		Natural Gas				-	-	-
	SMALL ISLANDS		485	574	785	100	100	100
		Hydro	7	6	10	2	1	1
		Geothermal				-	-	-
		Coal				-	-	-
		Oil-Based	478	568	775	98	99	99
		Natural Gas				-	-	-
		Gas Turbine				-	-	-

Table 1.2.c
NATIONAL POWER CORPORATION
COMPARATIVE BALANCE SHEET, FY 2001-2003
(In Thousand Pesos)
			2001	2002	2003
		P A R T I C U L A R S	Certified/	Estimate	Proposed
			Unaudited
ASSETS
	Current Assets		63,925,726	70,534,234	73,577,213
	Cash		1,648,275	7,706,465	7,779,121
	Investment in Securities		23,119,379	13,597,103	14,605,101
	Accounts Receivable		24,971,665	34,240,478	36,348,013
	Inventory		13,052,966	12,723,321	13,592,950
	Cash Advances to Various Parties		276,962	1,324,658	225,963
	Other Current Assets		856,479	942,209	1,026,065
	Investments		162,767	173,587	8,261,144
	Fixed Assets		270,069,683	281,104,978	291,465,798
	Deferred Assets		264,912,584	232,503,680	309,883,853
	Other Assets		406,914,520	532,929,015	560,644,522
TOTAL ASSETS			1,005,985,280	1,117,245,494	1,243,832,530
LIABILITIES
	Current Liabilities		116,963,331	182,450,823	267,796,658
	Accounts Payable to Suppliers or Trade Creditors		75,737,829	157,746,891	239,078,974
	Current Portion of Borrowings		41,225,502	24,703,932	28,717,684
	Long Term Liabilities		795,172,377	869,968,145	943,433,421
	Borrowings		286,614,287	270,492,585	307,595,210
	Others		508,558,090	599,475,560	635,838,211
	Trust Liabilities		0	5,713,059	6,721,056
	Deferred Credits		335,669	335,669	244,210
	Other Liabilities		0	2,670,353	2,530,524
TOTAL LIABILITIES			912,471,377	1,061,138,049	1,220,725,869
STOCKHOLDERS' EQUITY
	Paid in Capital		27,048,871	27,048,871	27,048,871
	Retained Earnings		(33,319,873)	(75,001,950)	(113,461,193)
	Other Capital		99,784,905	104,060,524	109,518,983
	Donated capital			2,979,000	2,979,000
	Appraisal capital			100,562,000	112,432,000
TOTAL STOCKHOLDERS' EQUITY			93,513,903	56,107,445	23,106,661
TOTAL LIABILITIES & STOCKHOLDERS'
	EQUITY		1,005,985,280	1,117,245,494	1,243,832,530

Table 1.2.d
NATIONAL POWER CORPORATION
COMPARATIVE PROFIT AND LOSS STATEMENT, FY 2001-2003
(In Thousand Pesos)
			2001	2002	2003
		P A R T I C U L A R S	Certified/	Estimate	Proposed
			Unaudited
	I. REVENUES		136,898,331	140,428,869	136,861,164
	Operating Revenues		115,697,654	117,869,514	127,785,666
	Others Revenues		21,200,677	22,559,355	9,075,498
	Interest Earnings		862,720	2,039,701	2,822,510
	Rental Income		8,634	52	0
	NOR-Test Run Plants		0	782,641	0
	Discount on Debt-Buyback		0	0	91,459
	CERA Collections-Forex Recovery		2,724,074	11,999,148	6,159,605
	CERA Collections-Forex Loss on Capital Recovery		17,193,386	7,394,698	0
	Others		411,863	343,115	1,924
	II. COST OF SALES		67,634,689	74,571,882	88,001,181
	III. GROSS PROFIT		69,263,642	65,856,987	48,859,983
	IV. OPERATING EXPENSES		79,641,031	106,290,149	86,312,376
	Personal Services		4,387,332	5,140,577	3,265,588