PSALM saves P800 million from RPT condonation

Danessa Rivera (The Philippine Star) - March 7, 2021 - 12:00am
https://www.philstar.com/business/2021/03/07/2082472/psalm-saves-p800-million-rpt-condonation

MANILA, Philippines — State-run Power Sector Assets and Liabilities Management Corp. (PSALM) saves more than P800 million with the recent executive order (EO) on real property tax (RPT) breaks.

President Durterte recently signed EO 126 which reduces the 2020 real property tax (RPT) due on property, machinery and equipment used for production of electricity by independent power producers (IPPs) covered by build-operate-transfer contracts (BOTs) with government-owned or controlled corporations (GOCCs).

With EO 126, the RPT to be paid by PSALM for 2020 is reduced to an amount equivalent to an assessment level of 15 percent of the fair market value of such property, machinery and equipment, depreciated at a rate of two percent per year, less any amount already paid.

Under the EO all interests and penalties on such deficiency RPT are condoned. RPT payments already made over and above the reduced RPT shall be applied to RPT for the succeeding years.

“With the issuance of EO 126, PSALM’s RPT obligations due for taxable year 2020 amounting to about P1.038 billion at 80 percent assessment rate would be reduced to about P200 million at 15 percent assessment rate,” PSALM president and CEO Irene Besido-Garcia said.

“This would translate to an estimated savings of P838 million for PSALM, which amount can therefore be utilized by PSALM for the payment of other maturing obligations assumed from NPC,” she said.

PSALM said it is a counterparty to several of these BOTs with IPPs and is thus responsible for the payment of the RPT obligations on such property, machinery and equipment.

“PSALM became a counterparty when Republic Act 9136 or the Electric Power Industry Reform Act of 2001 (EPIRA) transferred to PSALM these BOT contracts from the National Power Corp. (NPC), including the responsibility to pay the RPT obligations.

Contracts of PSALM with IPPs covered by EO 126 include contracts on Ilijan Natural Gas Power Plant, the Pagbilao Coal-Fired Thermal Power Plant, the Sual Coal-Fired Thermal Power Plant, the San Roque Hydro-Electric Power Plant and the Mindanao Coal-Fired Thermal Power Plant.

Last year, PSALM generated savings of P861.49 million due EO117, In 2019, the state-run firm was able to save P890.5 million because of EO 88.

PSALM is the agency mandated by Electric Power Industry Reform Act (EPIRA) of 2001 to handle the sale of the remaining state-power assets and the financial obligations of the National Power Corp. (Napocor). Its corporate life ends in 2026.

It reduces debts through the privatization of government-owned assets, collection of the proceeds and its effective implementation of its liability management program.

Since it was started, PSALM has privatized 31 generation assets, including Magat Hydroelectric Power Plant, Tiwi-Makban Geothermal Power Plants, Pantabangan-Masiway Hydroelectric Power Plant, Masinloc Coal-fired Thermal Power Plant and Batangas (Calaca) Coal-fired Thermal.

Its remaining generating assets include the Malaya Thermal Power Plant in Rizal, the Agus I, II, IV to VII and Pulangi Hydroelectric Power Plants in Mindanao, the Mindanao Coal-Fired Power Plant and some real estate properties.