By Filane Mikee Cervantes
The House Committee on Energy on Wednesday approved the measure extending the corporate life of Power Sector Assets and Liabilities Management (PSALM) Corporation for another 30 years.
The panel, chaired by Pampanga Rep. Juan Miguel Arroyo, approved the committee report and substitute bill to House Bill 10006.
Albay Rep. Joey Salceda, one of the authors of the bill, said it will help the government avoid having to shoulder around an estimated PHP198 billion worth of PSALM liabilities by 2026, when the corporation is set to expire under its original charter.
“We were supposed to have exhausted all of PSALM’s debts by 2026, if it were not for the Covid-19 pandemic. The privatization of certain assets was delayed due to this crisis," Salceda said.
Republic Act 9136, otherwise known as the Electric Power Industry Reform Act (EPIRA), was enacted in 2001 to ensure the solvency of then severely financially troubled National Power Corporation (NPC).
PSALM, which was established through the EPIRA, has the principal mandate of managing the orderly sale, disposition, and privatization of the NPC generation assets, real estate and other disposable assets, and Independent Power Producer (IPP) contracts to optimally liquidate all NPC financial obligations.
The financial obligations include stranded debts and stranded contract costs, which were transferred to and assumed by PSALM, pursuant to the EPIRA.
At the end of PSALM’s life, all its assets and outstanding debts, and IPP contract costs will revert to and be assumed by the national government.
Salceda said there are remaining power assets and real-property assets that need to be privatized by PSALM, and that the extension of its corporate life would allow more time for it to complete the privatization of its remaining power plants and IPP contracts.
He cited as an example the proposed development of the NPC property in Diliman, Quezon City into a mixed-use commercial complex, which would warrant the corporate life extension of the state-run corporation.
“The Quezon City estate is not insignificant, mind you. It’s a 5.2-hectare property owned by the National Power Corporation, and will be converted into something like BGC (Bonifacio Global City). But because of Covid, PSALM had to make certain readjustments to the development plan,” Salceda said.
He, however, noted that PSALM has to have a plan for the use of proceeds from privatization efforts over the course of the 30-year extension of its corporate life.
“I’d like to emphasize to PSALM that this is not a blank check from Congress. We want certain milestones and benchmarks," he said. “Certainly, over the course of the extension, PSALM will begin to be on the green. So, I want to know how these gains will be allocated."
He stressed the need for a radical reorientation of the power sector, away from coal and other volatile commodities, including investments in indigenous renewable energy and modernizing energy infrastructure.
“Agus-Pulangi hydroelectric power plants will be critical in this regard. The PSALM continues to own them, and Napocor will continue to operate them once the rehabilitation is completed. The World Bank is already financing the project,” Salceda said.