Scope of Asset and Liability Transfer to PSALM Corp.
- Section 49 of EPIRA requires the transfer of all existing generation assets, real estate, and other disposable assets of NPC.
- Outstanding liabilities arising from loans, bonds, securities, and other indebtedness instruments are to be transferred to the Power Sector Assets and Liabilities Management Corporation (PSALM Corp.).
- Formal transfer requires the consent of NPC's creditors under various financial agreements.
Facilitation of Creditor Consent Through Government Assumption
- To facilitate creditor consent for asset and liability transfer, the National Government's direct assumption of up to P200 billion of NPC's financial obligations is key.
- This assumption reduces financial uncertainty and reassures creditors regarding debt servicing.
Recommendation and Approval by Government Agencies
- The Development Budget Coordination Committee of the National Economic and Development Authority Board recommended the National Government take on the NPC financial obligations up to the set limit.
- This recommendation aligns with the National Government's fiscal program and prudent debt management objectives.
Department of Finance's Leading Role
- The Department of Finance (DOF) is designated as the lead agency responsible for resolving all issues related to this assumption.
- Consultations shall be made with the Department of Budget and Management (DBM) and the Commission on Audit (COA).
- DOF’s responsibilities include identifying specific debts to assume, determining annual debt absorption levels, coordinating arrangements between PSALM Corp., NPC, and the government, and ensuring proper accounting treatment.
- DOF may request assistance from other agencies such as the Department of Energy, NEDA, and other government bodies.
- All government agencies, including government-owned or controlled corporations, are obliged to provide cooperation and necessary data.
Authority of the Secretary of Finance
- The Secretary of Finance is empowered to sign all necessary agreements, deeds, and documents on behalf of the National Government to effectuate the assumption.
- DOF has full authority to determine the legal modalities for assumption of liabilities, ensuring financial responsibility remains with the government.
Effective Date and Implementation
- The Executive Order takes effect immediately upon publication in a newspaper of general circulation.
- It formalizes the process for the National Government's assumption of the financial obligations of NPC within the prescribed parameters.
Legal and Administrative Framework
- The assumption aligns with Republic Act No. 9136, Executive Order No. 292 (Administrative Code of 1987), and principles of sound public financial management.
- Emphasizes the government's role in managing public sector debt efficiently and ensuring obligations are serviced promptly.