Senate body ready to prepare report on bill extending life of PSALM

November 8, 2012 11:12 pm 

By Jelly F. Musico

MANILA, Nov. 8 – The Senate committee on energy is ready to draft the committee report on the bill extending the corporate life of the Power Sector Assets and Liabilities Management Corp. (PSALM) by 10 years more from 2026 to alleviate the impact of universal charge on consumers.

”The hearings are over. I just need to prepare the committee report,” Sen. Sergio Osmena III, committee chairman, said on Thursday after the Senate hearing on Senate Bill No. 3250 or an Act Extending the Life of, Strengthening and Reorganizing the PSALM.

Osmena said he will ask his committee members “if they have questions” and later consult with PSALM officials before preparing his committee report.

”The only complication here is the financial report is not easily understood. And I’m, we’ve been trying to simplify it so it will be easy to explain on the floor,” Osmena said.

The measure seeks to extend the corporate life of PSALM until 2036 to allow it to “better manage its remaining liabilities and IPP (independent power producer) contract obligations.”

Under Republic Act No. 9136 or the Electric Power Industry Reform Act, PSALM has been given a corporate life of 25 years from 2001 to 2026.

”So I said, give them another 10 years to make it 25 years, so they can borrow,” he said.

Osmena explained that the P0.39 per kilowatt-hour rate increase the PSALM asked from the Energy Regulatory Commission (ERC) can be reduced to P0.7 if the life of PSALM will be extended up to 2036 because it can refinance with 20 years amortization period.

PSALM president Emmanuel Ledesma Jr. agreed with Osmena that the passage of the bill would help mitigate the effect of universal charge on the consumers.

The law states that universal charge is imposed on all electricity end-users for payment for the stranded debts and stranded contract costs of the National Power Corporation.

The EPIRA created the PSALM with the principal purpose of managing the sale, disposition and privatization of Napocor assets and IPP contracts with greater objective of managing the Napocor financial obligations in an “optimal manner.”

”Ten years thereafter, PSALM Corp. has privatized more than 70% of the NPC (or Napocor) generation assets and lPP contracts, and has optimally liquidated US$ 5.62 billion of the NPC financial obligations out of the sales proceeds of the privatized assets amounting to US$ 5.51 billion as of the end of 2011,” Osmena said in his explanation note of the bill.

Osmena said the outstanding financial obligations still stand at US$ 17.14 billion as of June 2011. (PNA)

SCS/JFM

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