Article 95p. 95

NATURAL RESOURCES AND ENVIRONMENTAL LAWS STATUTES and IMPLEMENTING RULES AND REGULATIONS

and any or all of the ultimate facts upon which the offer

is based shall be considered for settlement purposes

only and shall not be used as evidence against any party

for

any

other purpose and shall not constitute an

admission by the party making the offer of any violation

of the laws, rules, regulations, orders and resolutions of

the ERC, nor as a waiver to file any warranted criminal

actions. In addition, Congress, upon recommendation of

the DOE and/or ERC, may revoke such franchise or

privilege granted to the person or entity who violated

the provisions of this Act.

CHAPTER V Privatization of the Assets of the

National Power Corporation

Section 47. NPC Privatization. - Except for the assets of

SPUG, the generating assets, real estate, and other

disposable assets as well as generation contracts of NPC

shall be privatized in accordance with this Act. Within six

(6) months from the effectivity of this Act, the PSALM

Corp. shall submit a plan for the endorsement by the

Joint Congressional Power Commission and the approval

of

the

President

of

the

Philippines,

on

the

total

privatization of the generation assets, real estate, other

disposable

assets

as

well

as

existing

generation

contracts of NPC and thereafter, implement the same, in

accordance with the following guidelines, except as

provided for in paragraph (e) herein:

(a) The privatization value to the national government of

the NPC generation assets, real estate, other disposable

assets as well as IPP contracts shall be optimized;

(b) The participation by Filipino citizens and corporations

in the purchase of NPC assets shall be encouraged;

In the case of foreign buyers at least seventy-five percent

(75%) of the funds used to acquire NPC-generating

assets

and

generating

contracts

shall

be

inwardly

remitted and registered with the Bangko Sentral ng

Pilipinas.

(c) The NPC plants, its related assets and assigned

liabilities, if any, shall be grouped in a manner which

shall promote the viability of the resulting generating

companies

(gencos),

ensure

economic

efficiency,

encourage

competition,

foster

reasonable

electricity

rates and create market appeal to optimize returns to

the government from the sale and disposition of such

assets in a manner consistent with the objectives of this

Act. In the grouping of the generating assets of NPC, the

following criteria shall be considered:

(1) A sufficient scale of operations and balance sheet

strength

to

promote

the

financial

viability

of

the

restructured units;

(2) Broad geographical groupings to ensure efficiency of

operations

but

without

the

formation

of

regional

companies or consolidation of market power;

(3) Portfolio of plants to achieve management and

operational synergy without dominating any part of the

market or of the load curve; and

(4) Such other factors as may be deemed beneficial to

the best interest of the national government while

ensuring attractiveness to potential investors.

(d) All generation assets and IPP contracts shall be sold

in an open and transparent manner through public

bidding;

(e) The Agus and the Pulangui complexes in Mindanao

shall

be

excluded

from

among

the

generating

companies

that

will

be

initially

privatized.

Their

ownership shall be transferred to the PSALM Corp. and

both shall continue to be operated by NPC. In case of

privatization,

said complexes may be privatized not

earlier than ten (10) years from the effectivity of this Act,

and,

until

privatized,

shall

not

be

subject

to

Build-Operate-Transfer

(B-O-T),

Build-Rehabilitate-Operate-Transfer (B-R-O-T) and other

variations

pursuant

to

Republic

Act

No.

6957,

as

amended by Republic Act No. 7718. The privatization of

Agus

and

Pulangui complexes shall be left to the

discretion of PSALM Corp. in consultation with Congress;

(f) The steamfield assets and generating plants of each

geothermal complex shall not be sold separately. They

shall be combined and each geothermal complex shall

be sold as one package through public bidding. The

geothermal

complexes covered by this requirement

include, but not limited to, Tiwi-Makban, Leyte A and B

(Tongonan), Palinpinon, and Mt. Apo;

(g)

The

ownership of the Caliraya-Botokan-Kalayaan

(CBK) pump storage complex shall be transferred to the

PSALM Corporation and shall continue to be operated by

NPC;

(h) Not later than three (3) years from the effectivity of

this

Act,

and

in

no

case

later

than

the

initial

implementation of open access, at least seventy percent

(70%) of the total capacity of generating assets of NPC

and of the total capacity of the power plants under

contract with NPC located in Luzon and Visayas shall

have been privatized; and

(i) NPC may generate and sell electricity only from the

undisposed

generating

assets and IPP contracts of

PSALM Corp.: Provided, That any unsold capacity shall be

privatized

not

later

than

eight

(8)

years from the

effectivity of this Act.

Section 48. National Power Board of Directors. - Upon

the passage of this Act, the provisions of R.A. 6395,

otherwise known as the NPC Charter, referring to the

composition of the National Power Board of Directors,

are

hereby

repealed

and

a

new

Board

shall

be

immediately

organized.

The

new

Board

shall

be

composed of the Secretary of Finance as Chairman, with

the following as members: the Secretary of Energy, the

Secretary of Budget and Management, the Secretary of

Agriculture,

the

Director-General

of

the

National

Economic and Development Authority, the Secretary of

Environment and Natural Resources, the Secretary of

Interior and Local Government, the Secretary of the

Department of Trade and Industry, and the President of

the National Power Corporation.

CHAPTER VI

POWER

SECTOR

ASSETS

AND

LIABILITIES

MANAGEMENT

Section

49.

Creation

of

Power

Sector

Assets

and

Liabilities Management Corporation. - There is hereby

created a government owned and controlled corporation

to be known as the "Power Sector Assets and Liabilities

Management Corporation", hereinafter referred to as the

"PSALM Corp.", which shall take ownership of all existing

NPC generation assets, liabilities, IPP contracts, real

estate and all other disposable assets. All outstanding

obligations of the National Power Corporation arising

from loans, issuances of bonds, securities and other

instruments of indebtedness shall be transferred to and

assumed by the PSALM Corp. within ninety (90) days

from the approval of this Act.

Section 50. Purpose and Objective, Domicile and Term of

Existence. - The principal purpose of the Corporation is to

manage the orderly sale, disposition, and privatization of

NPC generation assets, real estate and other disposable

assets,

and

IPP

contracts

with

the

objective

of

© 2018 Compiled by RGL

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