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NDC to tap agri-agra fund for infra |
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By BERNIE CAHILES-MAGKILAT
The Manila Bulletin 08/22/2005 The National Development Co. (NDC), the government’s investment arm, is planning of tapping a portion of the banks’mandatory Agri-Agra fund allocation to finance some of its priority infrastructure projects instead of the planned bond float. Trade and Industry Secretary Peter B. Favila, also NDC Board chair, espoused this idea in light of the difficulty to undertake bond float since investors are likely to ask for sovereign guarantee. "I already told NDC general manager Arthur Aguilar that if you float bonds without guarantee then that is okey but chances are investors will ask for sovereign guarantee," he said. The NDC will be required to get clearance from the Monetary Board for the bond float. Favila has also made his position clear that DTI will not endorse nor recommend any request for sovereign guarantee. "Our friends from overseas should understand this because they’re the ones saying we should put our fiscal house in order," he said. "We better get a slice of the banks’ Agri-Agra fund after all the funds only are also spent in schools and bridges construction," he said. For compliance purposes of the Agri-Agra law, which requires banks to allocate 25 percent of its total loan portfolio for Agri-Agra projects, banks normally used the fund to buy Treasury Bills. Favila said that proceeds from the purchase of T-bills should now be specifically approved for Agri-Agra infrastructure projects because the fund just get lost in the national budget. While the agri-agra fund should not be used for infrastructure projects, Favila said it is useless to use to fund for agricultural projects when there are no roads leading to these agricultural lands. Favila said the re-allocation of the bank’s Agri-Agri funds would need a minor amendment of the law. "I think the banks will agree because this is neutral to them," he said. Favila said he has yet to determine the total available fund from the banks’Agri-Agra fund allocation. Earlier, NDC was confident of raising P8 billion as its equity on vital infrastructure projects estimated to cost P100 billion. Former Trade and Industry Secretary Juan B. Santos said that part of the amount would be raised the amount through P5 billion long term-peso denominated bond float and the remaining P3 billion would come from the sale of real estate assets. The NDC through the Philippine Infrastructure Corp. (PIC) has an estimated financing requirement of P100 billion within six years to bankroll preidentified viable high impact infrastructure projects. Some of these projects include the South Luzon expressway rehabilitation; the C-6 Calabarzon expressway; North Luzon east expressway; TarlacPangasinan-La Union expressway; Laguindingan/Mindanao airport cluster; Busuanga airport; cold storage network and the power aggregate corporation. |
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