THE DEPARTMENT of Energy announced plans to extend the life of Power Sector Assets and Liabilities Management (PSALM) in the new version of the EPIRA Law.
On Wednesday, DOE Secretary Raphael Lotilla said the corporate life of PSALM must be extended to prevent the government from absorbing P300 billion worth of financial obligations in 2026.
“One of the things we need to do is to prevent an increase in rates and in order to prevent the government from having to absorb 300 billion pesos in 2026, when the life of PSALM ends, we will have to extend corporate life of PSALM,” Lotilla said during the post-SONA forum on July 24.
The original corporate life of PSALM as stipulated in Republic Act No. 9136 or the Electric Power Industry Reform Act (EPIRA) of 2001 is set at 25 years.
After the effectivity of the law in 2001, PSALM will expire in June 2026.
PSALM took over the ownership of all existing generation assets of the National Power Corporation (NPC), independent power producer (IPP) contracts, real estate, and all other disposable assets including the transmission business of the National Transmission Corporation.
It also assumed all outstanding obligations of NPC arising from loans, issuances of bonds, and securities.
Once PSALM expires, the government will shoulder the debts from its liabilities.
“There’s an agreement in the Congress to go ahead with that,” Lotilla stressed, referring to the EPIRA review.
The secretary added there has to be a counterparty for rehabilitation and enhanced capacity of the Mindanao Agus Hydropower plant.
At present, the installed capacity of Agus is 1000 MW, while its dependable capacity is only 600 MW, he said.
“There is still a potential of rehabilitating it back to 1000 MW and producing an additional 400 MW for Mindanao and also for other parts in the country through Mindanao-Visayas interconnection,” Lotilla added.
The additional capacity will address the growth of the need for power in Mindanao which has been growing by at least 6% annually.
“By extending the life of PSALM, we will be able to have a counterpart for the Agos plants,” the secretary stressed.
President Ferdinand Marcos Jr. during his State of the Nation Address on Monday, July 22 called on Congress to review the EPIRA Law to cut electricity costs.
