Philippines: Power Sector Development Program Loan

Sovereign Project | 37752-013

Summary

The primary objective of the program loan is to restore financial viability of the power sector and specifically support the Government's committed action to absorb NPC's long-term liabilities.

The specific objective of Subprogram 1 of the PSDP is to support the absorption of NPC's stranded debt and cost by the Government and create necessary conditions for the successful implementation of the privatization program in Subprogram 2.

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Project Name Power Sector Development Program Loan
Project Number 37752-013
Country Philippines
Project Status Closed
Project Type / Modality of Assistance Loan
Source of Funding / Amount
Loan 2282-PHI: Power Sector Development Program Loan
Ordinary capital resources US$ 450.00 million
Loan: Power Sector Development Program Loan
Japan Bank for International Cooperation (non-ODA) US$ 300.00 million
Strategic Agendas Inclusive economic growth
Drivers of Change Governance and capacity development
Private sector development
Sector / Subsector

Energy - Energy sector development and institutional reform

Gender Equity and Mainstreaming No gender elements
Description

The primary objective of the program loan is to restore financial viability of the power sector and specifically support the Government's committed action to absorb NPC's long-term liabilities.

The specific objective of Subprogram 1 of the PSDP is to support the absorption of NPC's stranded debt and cost by the Government and create necessary conditions for the successful implementation of the privatization program in Subprogram 2.

Project Rationale and Linkage to Country/Regional Strategy

The financial crisis faced by Philippines power sector has aggravated and complicated the country's macro-economic situation. Despite tax reform measures implemented by the Government, the National Power Corporation's (NPC's) requirement for Government provision of guarantees on its debt obligations and its liabilities with respect to contracts with independent power producers (IPPs) remain a serious financial drain on the Government's fiscal resources. Ensuring financial recovery of the power sector is a key to the Government's efforts at reversing fiscal imbalances and improving its fiscal consolidation.

The proposed Power Sector Development Program (PSDP) has been designed to ensure the implementation of mitigating policy measures which will lead to gradual but steady restoration of the power sector's financial viability with further parallel improvements in the regulatory framework, the competitive market for power, and opportunities for private sector participation. The PSDP will support the Government's assumption of P200 billion of NPC's debt. Timely implementation of the PSDP in tandem with the implementation of tax reforms will strengthen the Government's financial management and assist in achieving fiscal consolidation.

The power sector reform and restructuring has reached a critical juncture. While it has been widely recognized that the financial crisis of the power sector is the serious result of substantive delays in the sector policy reform and restructuring implementation, some vested interests opposing the ongoing sector reform and restructuring cite it as a principal cause of the current sector financial crisis and suggest returning to the previous vertically integrated government owned monopoly. Therefore, timely undertaking of aggressive steps to continue the efforts to complete the sector policy reform and restructuring has become even more critical and fundamentally important that both the Government and ADB should reiterate the confidence in achieving the policy objectives of such initiatives and envisaged development impacts and results.

Impact
Project Outcome
Description of Outcome
Progress Toward Outcome
Implementation Progress
Description of Project Outputs
Status of Implementation Progress (Outputs, Activities, and Issues)
Geographical Location Whole country
Safeguard Categories
Environment C
Involuntary Resettlement C
Indigenous Peoples C
Summary of Environmental and Social Aspects
Environmental Aspects
Involuntary Resettlement
Indigenous Peoples
Stakeholder Communication, Participation, and Consultation
During Project Design
During Project Implementation
Business Opportunities
Consulting Services No consulting services required.
Procurement No contracts for civil works/goods to be awarded.
Responsible ADB Officer Zhai Yongping
Responsible ADB Department Southeast Asia Department
Responsible ADB Division Energy Division, SERD
Executing Agencies
Department of FinancePresidentMakati, Metro Manila, Philippines
Timetable
Concept Clearance 17 Jun 2005
Fact Finding 19 Apr 2004 to 06 May 2005
MRM 07 Sep 2005
Approval 08 Dec 2006
Last Review Mission -
PDS Creation Date 01 Mar 2006
Last PDS Update 06 Feb 2009

Loan 2282-PHI

Milestones
Approval Signing Date Effectivity Date Closing
Original Revised Actual
08 Dec 2006 11 Dec 2006 19 Dec 2006 30 Jun 2009 - 30 Jun 2009
Financing Plan Loan Utilization
Total (Amount in US$ million) Date ADB Others Net Percentage
Project Cost 750.00 Cumulative Contract Awards
ADB 450.00 08 Dec 2006 450.00 0.00 100%
Counterpart 0.00 Cumulative Disbursements
Cofinancing 300.00 08 Dec 2006 450.00 0.00 100%

Safeguard Documents

See also: Safeguards

No documents found.

Evaluation Documents

See also: Independent Evaluation
Title Document Type Document Date
Philippines: Power Sector Development Program Validations of Project Completion Reports Dec 2012

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