PSALM settles loan obligations of ROMELCO to the Provincial Government of Romblon

24 Nov 2006

The Power Sector Assets and Liabilities Management Corporation (PSALM) has settled the loan obligation of the Romblon Electric Cooperative Inc. (ROMELCO) amounting to P2.12 million to the Provincial Government of Romblon during a ceremonial turnover of the check payment held last Tuesday, 21 November, at the PSALM offices in Makati City.

The audited loan, which includes principal, regular interests, charges and penalties, was used by ROMELCO to fund its rural electrification projects in Romblon. PSALM assumed the outstanding loan obligation of ROMELCO to the Provincial Government of Romblon on 28 February 2005 pursuant to Section 60 of the Electric Power Industry Reform Act (EPIRA). Under the EPIRA, PSALM is mandated to assume all outstanding financial obligations of electric cooperatives (ECs) to the National Electrification Administration (NEA) and other government agencies.

On 31 August 2005, the PSALM Board approved and confirmed its full payment to the Provincial Government of Romblon and authorized the signing, execution and delivery of the Memorandum of Agreement (MOA) that stipulates the terms and conditions in the payment of the loan obligations. PSALM forwarded to ROMELCO three execution copies of the MOA on 02 December 2005.

On 17 August 2004, the Sangguniang Panlalawigan of Romblon authorized the province to enter into the tripartite MOA that also included PSALM and ROMELCO.

The MOA was signed by Romblon Governor Perpetuo B. Ylagan and ROMELCO general manager Rene M. Pajilagutan on 18 January 2006. PSALM President Nieves L. Osorio signed the agreement on 23 May 2006.

Governor Ylagan, Mr. Pajilagutan and ROMELCO president Cyril Tangsiongco expressed their gratitude to PSALM for the payment of the loan as it paves the way for the electrification of the far-flung barangays in Romblon.

The NEA, which is tasked to provide financial, institutional and technical services to electric distribution utilities, stated that its collection efficiency has reached 90%, thanks to PSALM's assumption and condonation of the EC loans.

Aggregate EC loans with NEA condoned by PSALM amount to P17.98 billion. Of this total, P12.29 million was incurred by ROMELCO. From 27 October 2003 to 27 September 2006, PSALM has paid NEA the sum of P5.08 billion.

PSALM also condoned other EC loans from other government agencies and local government units. In December 2004, PSALM paid the P49.44-million loan of the Batangas Electric Cooperative Inc. II (BATELEC II) to the Development Bank of the Philippines. Another P25-million loan of the Palawan Electric Cooperative Inc. (PALECO) was paid to the Provincial Government of Palawan in December 2005.

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