The Department of Energy (DOE) supports the proposal extending the corporate life of the Power Sector Assets and Liabilities Management Corp. (PSALM) beyond 2026 as part of the plan helping the government manage over P300 billion worth of power generation-related liabilities.
Energy Secretary Raphael Lotilla said this forms part of provisions the DOE has asked the legislators to review given President Marcos Jr.’s call for amendments to the Electric Power Industry Reform Act (EPIRA).
“The President emphasized the need to introduce reforms. One of them is extending the corporate life of PSALM. At the time the EPIRA was enacted in 2001, we thought it would take only 25 years to complete the privatization and raise the funds necessary to pay off the debts of the National Power Corp. (NPC),” said Lotilla in a briefing in Pasay City.
According to the Energy chief, Congress has agreed to extend the PSALM’s corporate life which would otherwise compel the national government to assume its liabilities and increase electricity rates charged on businesses and households.
State-owned PSALM, whose corporate life lapses in 2026, is mandated to privatize power-related assets to pay for outstanding financial obligations inherited from the NPC.
The PSALM has reduced its financial obligations to P283.65 billion as oat end-March this year from peak level of P1.24 trillion in 2023.
The reduction was traced in part to the prepayment of Therma Luzon Inc.’s monthly obligations to the coal-fired Pagbilao power plant independent power producer (IPP) contract in November 2023, the sale and turnover of the Casecnan hydroelectric power plant to Fresh River Lakes Corp. in February 2024, and the successful privatization of selected real estate assets that generated a total P31.77 billion.
The sale of generation assets, appointment of IPP administrators, and the privatization of government transmission business amount to P903.412 billion as at end-March this year. Of the total, P769.602 billion have been remitted to the Bureau of the Treasury.
The PSALM has adopted a multi-pronged strategy for reducing its financial obligations, including the optimization of operations of its remaining power assets and maximizing revenue streams separate from entering into short-term lease agreements over certain assets not yet scheduled for privatization that raise P12.06 million in additional revenue.
The PSALM has also achieved a collection efficiency rate of 93.35 percent equivalent to P14.91 billion from the sale of its remaining power plants.
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