17 Dec 2021
The Power Sector Assets and Liabilities Management Corporation (PSALM) is grateful to President Rodrigo Roa Duterte and the Department of Finance (DOF) for the issuance of Executive Order (EO) No. 157. The said EO No. 157 authorizes the reduction of the 2021 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).
EO No. 157 is especially significant to PSALM as it is a counterparty to several BOT contracts by virtue of Republic Act No. 9136, or the Electric Power Industry Reform Act of 2001 (EPIRA). Under the EPIRA, the BOT contracts of the National Power Corporation were transferred to PSALM, including the responsibility to pay the RPT obligations of the IPPs.
Through EO No. 157, the RPT assessment level is reduced to 15% of the fair market value of the property, machinery and equipment, depreciated at two percent (2%) per annum, less any amount already paid by the IPPs. RPT payments remitted by the IPPs in excess of the RPT due for the previous years will be applied to future RPT assessments.
“We are very thankful that President Duterte signed EO No. 157. With the issuance of this EO No. 157, PSALM’s 2021 RPT obligations amounting to about PHP1.019 billion at 80% assessment rate, would be reduced to about PHP200 million at 15% assessment rate. This would translate to an estimated savings of PHP822 million for PSALM, which amount can then be utilized by PSALM for the payment of other maturing obligations assumed from NPC,” PSALM President and CEO, Irene Besido- Garcia, said.
PSALM’s current contracts with IPPs include contracts with 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.
Strategic Communications and Partnership Division |