Question & AnswerQ&A (EXECUTIVE ORDER NO. 370)
The main purpose is to authorize and approve the direct assumption by the National Government of a portion of the financial obligations of the National Power Corporation (NPC) in accordance with Section 32 of Republic Act No. 9136 (Electric Power Industry Reform Act of 2001).
Under Republic Act No. 9136, also known as the Electric Power Industry Reform Act of 2001 (EPIRA), specifically Section 32.
The National Government may assume financial obligations of NPC not to exceed Two Hundred Billion Pesos (P200,000,000,000.00).
PSALM Corp. is mandated to transfer and assume all existing generation assets, real estate, disposable assets, and outstanding liabilities of NPC arising from loans, bonds, securities, and other indebtedness instruments.
The consent of NPC's creditors under various loan and financial agreements is required for the formal transfer of NPC's assets and liabilities to PSALM Corp. to ensure legal compliance and agreement among all parties involved.
The Department of Finance (DOF) is the lead agency, in consultation with the Department of Budget and Management (DBM) and the Commission on Audit (COA).
The DOF is tasked with identifying specific debts to be assumed, determining annual debt absorption levels, arranging agreements between PSALM, NPC, and the government, proper accounting treatment, and implementing the assumption of liabilities.
The Secretary of Finance is authorized to enter into, conclude, and sign agreements, deeds, and other documents to implement and give legal effect to the assumption of NPC's financial obligations by the National Government.
The assumption was to begin on December 31, 2004, following a schedule approved by the Development Budget Coordination Committee.
All heads of departments, agencies, bureaus, offices, including government-owned or controlled corporations, are enjoined to fully assist and provide information and data necessary for the Department of Finance to carry out and implement the order.