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Philippines - Energy Sector Project (English)

Ratings for the Energy Sector Project in Philippines are as follows: overall outcome of the project was rated satisfactory, and the performance of the Bank and the Borrower were rated satisfactory. Lessons learned include: It would be trite to state that any commercial institution must maintain a continuous vigil over its financial position. However, considering the experience of National Power Corporation (NPC), this lesson bears restatement. Financial and commercial policies must be adopted with due consideration of their ultimate consequences. Exigencies of operation must not result in onerous financial conditions, as it could have long-term repercussions. It would be desirable that NPC study the implications of the several indigenous peoples plan (IPP) contracts it has signed with take-or-pay clauses and high plant factors. While contract conditions must be honored, NPC should have a clear idea of the problems which may arise from such obligations, including the problems associated with coordination of the IPPs. Private investment must be secured under competitive conditions to ensure that market forces help achieve least-cost solutions. Investors must be expected to bear all commercial risks. Where exigencies of circumstances, such as the pressing need for external capital/new technology, obliges governments or their agencies to assume some of the commercial risks, there should be a thorough analysis of the long-term implications with objective, expert assistance, and then the terms of such offers should be negotiated on fair terms for both sides.

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Philippines - Energy Sector Project (English). Washington, D.C. : World Bank Group. http://documents.worldbank.org/curated/en/522511468293682968/Philippines-Energy-Sector-Project