Professional Documents
Culture Documents
After emerging from the crippling power crisis that occurred in the early 1990s, the Philippine
government embarked on an industry privatization and restructuring program envisioned to ensure
the adequate supply of electricity to energize its developing economy. This restructuring scheme is
embodied in Republic Act No. 9136, the Electric Power Industry Reform Act (EPIRA).
Enacted on 08 June 2001 the EPIRA seeks to ensure quality, reliable, secure and affordable electric
power supply; encourage free and fair competition; enhance the inflow of private capital; and
broaden the ownership base of power generation, transmission and distribution. The EPIRA
restructured the power industry by organizing it into four sectors: generation, transmission,
distribution, and supply; and introducing the following major reforms:
1. restructuring of the entire power industry to introduce competition in the generation sector;
In implementing the restructuring of the power sector, the EPIRA created the Power Sector Assets and
Liabilities Management (PSALM) Corporation, a wholly-owned and -controlled government entity, to
take 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. By the same token, PSALM assumed
all outstanding obligations of NPC arising from loans, issuances of bonds, securities, and other
instruments of indebtedness. The principal purpose of PSALM, as mandated by the EPIRA, is to
manage the orderly sale and privatization of these assets with the objective of liquidating all of NPC's
financial obligations in an optimal manner.
Formally established on 26 June 2001, PSALM began operations on 01 July 2001 with the following
functions:
Structure the sale, privatization or disposition of NPC assets and IPP contracts and/or their
energy output based on such terms and conditions that will optimize the value and sale prices
of these assets;
Liquidate NPC's stranded contract costs using proceeds from sales and other properties,
including proceeds from the Universal Charge;
Collect, administer and apply the NPC portion of the Universal Charge.
The successful privatization of these assets will pave the way for the declaration of open access and
retail competition as the EPIRA has conditioned it on the existence of at least 70% of the total capacity
of generating assets of NPC and of the total capacity of the power plants under contract with NPC in
Luzon and Visayas.
Moreover, to strengthen the financial viability of electric cooperatives (ECs), PSALM assumed all their
outstanding financial obligations to the National Electrification Administration and other government
agencies.
PSALM has 25 years from the effectivity of the EPIRA to fulfill its twin mandates unless otherwise
extended by law. After the end of its corporate life, all assets it holds, all moneys and properties
belonging to it, and all its outstanding liabilities will revert to and be assumed by the national
government.
Vision
"A debt-free PSALM towards a competitive electric power industry through strategic asset
privatization and financial management."
Mission
Ensure the orderly privatization of PSALM's power and other disposable assets
Mandate
The principal purpose of PSALM 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
liquidating all NPC financial obligations and stranded contract costs in an optimal manner.
Core Values
Professionalism
Respect
Excellence
Teamwork
Transparency
Integrity
Privatization of National Power's Generation and TransCo's Transmission Assets
PSALM undertakes a range of activities preparatory to the bid proper, including drafting information
memoranda and transaction documents to be distributed to prospective bidders. PSALM also conducts
due diligence on its assets to determine their readiness for privatization.
The publication of the Invitation to Bid officially begins the bidding process. The notice also indicates
schedules of the pre-bid conference, the start of the conduct of due diligence by the bidders, the
distribution of the final transaction documents, and the date for opening of bids.
PSALM will also appoint, again through public bidding, IPP (independent power producer) administrators
who will manage the energy output of different portfolios of power plants run by IPPs. These IPPs were
contracted in the 1990s by National Power to meet the country's growing electricity requirements.
Liability Management
PSALM manages all existing debt of National Power, capital lease payments to IPPs, and the outstanding
obligations of electric coops to the National Electrification Administration and other government
agencies. This function includes the management of other liabilities assumed by PSALM as well as its
future borrowings. This is to ensure that PSALM will be able to pay all principal and interest payments as
they fall due. Refinancing, whenever necessary, will be obtained at minimum cost. PSALM's liability
management function also requires the mitigation of foreign exchange risks through hedging or other
means since some of the debt are denominated in foreign currency.
PSALM, with the supervision and approval of the ERC, administers the collection of the Universal Charge
(UC), which is collected every month by the distribution utilities from all electric consumers. The UC
fund is used to finance, as specified by law, missionary electrification, environmental protection
projects, and payment of National Power's stranded debts.
The Organization: Leadership
The Secretary of Finance acts as the chairman of the PSALM Board of Directors, with the Secretary of
Energy, Secretary of Budget and Management, the Director-General of Socio-Economic Planning, the
Secretary of Justice, the Secretary of Trade and Industry and the President of PSALM as ex-officio
members.
While PSALM has its own Board of Directors and set of corporate officers, it reports to the Department
of Energy (DOE) which directly supervises all energy related programs, projects and activities, including
the restructuring of the electricity industry.
CARLOS G. DOMINGUEZ
Secretary
Department of Finance
www.dof.gov.ph
ALFONSO G. CUSI
Secretary
Department of Energy
www.doe.gov.ph
BENJAMIN E. DIOKNO
Secretary
Department of Budget and Management
www.dbm.gov.ph
ERNESTO M. PERNIA
Director-General
National Economic and Development Authority
www.neda.gov.ph
VITALIANO N. AGUIRRE II
Secretary
Department of Justice
www.doj.gov.ph
RAMON M. LOPEZ
Secretary
Department of Trade and Industry
www.dti.gov.ph
LOURDES S. ALZONA
Officer-in-Charge
Power Sector Assets & Liabilities Management Corporation
www.psalm.gov.ph
Appointed by the President of the Philippines, the PSALM President, who is also the Chief Executive
Officer of the corporation,heads the PSALM Management Team. The President represents the
Corporation in all dealings and transactions with the local and national government, public and private
companies, the media, and the general public.
LOURDES S. ALZONA
Officer-in-Charge
ARNOLD C. FRANCISCO
Vice President, Asset Management
GEOFFRY D. MASANCAY
Officer-in-Charge, Office of the General Counsel
HELENA C. TOLENTINO
Vice President, Corporate Social Responsibility
The Organization: Functional Groups
PSALM is divided into five functional groups namely: