Department of Justice’s (DOJ) legal opinion on the dividend remittances to the national government (NG) received by PSALM

28 Aug 2024

The DOJ issued Opinion No. 38, Series of 2024 on 14 August 2024 to address: (1) Whether or not the National Transmission Corporation (TransCo) is required to remit dividends to the NG under Republic Act (RA) No. 7656 otherwise known as the Dividend Law; and (2) Whether or not the interest income from the deferred payment on the concession fee is part of the net profit to be remitted by the TransCo to PSALM, pursuant to the RA No. 9136 or the Electric Power Industry Reform Act (EPIRA) of 2001.

The DOJ opined that “the interest paid by NGCP to PSALM, as part of the Deferred Payments, is included in the overall Concession Fee, and is thus not subject to remittance to the national government under the Dividends Law.”

In sum, the DOJ ruled that “since the interest component of the Deferred Payments of the Concession Fee are privatization proceeds, these must be remitted to PSALM under Section 18 of EPIRA, and not to the national government. This does not mean though that TransCo is exempted from remitting dividends to the national government. TransCo is still covered by the Dividend Law, but the dividend base should not include the Concession Fee.”

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