CoA to NFC: Government subsidy better option than borrowings

The Commission on Audit has called the attention of the Northern Foods Corp. to request for a bail out after noting its deficit in retained earnings account ballooned to P765.79 million as of May 31.

The NFC, a government-owned or controlled corporation under the Land Bank of the Philippines, suffered losses dating back several years on top of unpaid interest on loans.

Financial statements submitted by the government-owned and-controlled corporation showed it posted net losses of P31.594 million in 2015, P25.09 million in 2016, P42.86 million in 2017, P34.623 million in 2018 and P52.829 million in 2019.

The unpaid loans had caused interest to climb from P38.39 million in 2015 to P41.811 million this year.

“The audit team noted the significant deficit in the retained earnings account which soared to P765,789,418.15 as of May 31, 2019, thus casting doubt as to the ability of the agency to continue operating,” the report read.

To seek subsidies from the government would be a better option for the GOCC, instead of resorting to more borrowings to avoid the piling-up of interests.

In 1992, the NFC was already being eyed for privatization, but the plan did not push through.

An attempt to dispose of the company through a negotiated sale in 1996 also failed as well as another bidding in 2000.

Based on the management comment to the 2019 audit observation, its latest privatization plan was submitted to the Office of the President for approval.

While the GOCC encountered some problems,  it was still able to provide income to 1,577 farmer-beneficiaries.