PSALM is required under the Electronic Power Industry Reform Act (EPIRA) to assume all outstanding financial obligations of electric cooperatives to the NEA and other government agencies incurred as of effective date of the EPIRA or on June 26, 2001, for the purpose of financing the Rural Electrification Program.
NEA has verified an estimated total amount of P18 billion worth of loans for condonation.
With the initial payment, PSALM leaves on outstanding balance of P15.6 billion composed of rural electrification (P11.7 billion); housewiring (P12.5 million); mini-hydro (P2.5 billion); and dendro-thermal ( P1.33 billion).
In addition to the partial payment owed by electric cooperatives to NEA, PSALM has also initiated the condonation of the cooperatives’ loans to other government entities.
On Feb. 28, 2005, PSALM has approved the condonation of the loans of specific electric cooperatives amounting to a total of P35.76 million.
As of March 4, 2005, PSALM’s outstanding obligations to other government agencies include: provincial government of Palawan, P28 million; Silay City P914,838; Municipalities of Atimonan, Buenavista, San Narcisco and San Andres in Quezon Province, P2.4 million; municipality of Real, Quezon, P1.8 million; provincial government of Romblon, P2.1 million and Development Bank of the Philippines, P500,000.
PSALM is mandated by the EPIRA to primarily manage the orderly sale, disposition and privatization of the National Power Corp.’s generation assets, real estate and other disposable assets and independent power producer (IPP) contracts, as well as the transmission assets and facilities and sub-transmission functions and assets of the National Transmission Corp. (Transco) with the objective of liquidating all Napocor financial obligations and stranded contract costs in an optimal manner.
The loan condonation of the electric cooperatives is part of the objective of the EPIRA to achieve a transparent and reasonable cost of electricity.