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Sixteenth Congress
First Regular Session

HOUSE BILL No; 4533

Introduced by: REP. HARLIN CAST. ABAYON
1st District, Northern Samar

EXPLANATORY NOTE

This bill seeks to provide for the restructuring of loan
obligation and condonation of interests and surcharges due as well
as other interest that may accrue on the principal loan secured by
Northern Samar Electric Cooperative, Inc. (NORSAMELCO) payable
to the Power Sector Assets and Liabilities Management Corporation
(PSALM).

In 2003, NORSAMELCO incurred accounts payable due for its
power bills in the amount of twelve million five hundred twenty-
seven thousand five hundred thirty-five pesos (P12,527,535.00).

For the past eleven (11) years, NORSAMELCO has not been
able to pay in full its yearly power bills. So, its outstanding balance
as of December 2013 with PSALM ballooned to six hundred sixty-
seven million three hundred seventy thousand three hundred
ninety-six pesos (P 667,370,396.00).

NORSAMELCO was continuously paying its payables but
insufficient to cover the indebtedness in full.

Its payments that where initially applied for interests and
surcharges since 2003 amounting to one hundred sixty-five million
nine hundred four thousand seventy-eight pesos (P165,904,078.00)
shall now be applied to the outstanding balance of six hundred
sixty-seven million three hundred seventy thousand three hundred
ninety-six pesos (P 667,370,396.00). Thus, reduces the
indebtedness and left a remaining balance of five hundred one


million four hundred sixty-six thousand three hundred eighteen
pesos (P 501,466,318.00).

NORSAMELCO is heavily burdened by its loan transactions
with the PSALM thus constantly impeding its mandate to render
efficient service and regular supply of electricity to Nortehanons.

As shown above, PSALM should be considerate by applying
leniency to NORSAMELCO in its loan obligation by restructuring
the loan and condoning the interests and surcharges due as well as
other interest that may accrue therefrom.

Henceforth, the remaining balance of five hundred one million
four hundred sixty-six thousand three hundred eighteen pesos (P
501,466,318.00) shall be paid free of interest in twenty (20) years
with monthly amortization of two million three hundred twenty-one
thousand six hundred three pesos (P2,321,603.00) or equivalent to
yearly payment of twenty-seven million eight hundred fifty-nine two
hundred forty pesos (P27,859,240.00) with two (2) years grace
period. All interests and surcharges due and payable as well as
other interests that may accrue therefrom shall be condoned.

Further, it is to be noted that through electric cooperatives
total electrification of the country is being pursued by enhancing
distribution development. It is therefore imperative to restructure
ailing electric cooperatives with the view of making them
economically and financially viable.

In view of the foregoing, the immediate passage of this bill is
imperative.

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HARLIN CAST. ABAYON


Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

Sixteenth Congress
First Regular Session

HOUSE BILL NO.:_ 4533

Introduced by: REP. HARLIN CAST. ABAYON
1st District, Northern Samar

AN ACT PROVIDING FOR THE
RESTRUCTURING OF LOAN OBLIGATION AND CONDONATION OF
INTEREST AND SURCHARGES DUE AS WELL AS OTHER INTEREST
THAT MAY ACCRUE ON THE PRINCIPAL LOAN SECURED BY
NORTHERN SAMAR ELECTRIC COOPERATIVE, INC. (NORSAMELCO)
PAYABLE TO THE POWER SECTOR ASSETS AND LIABILITIES
MANAGEMENT CORPORATION (PSALM)

Be it enacted by the Senate and the House of Representatives in Congress
assembled:

Section 1. Title. This Act shall be known as the Northern
Samar Electric Cooperative (NORSAMELCO) Loan Restructuring
and Condonation Act. It shall hereinafter referred to as the Act.

Section 2. Declaration of Policy. It is hereby declared the
policy of the State to promote sustainable development in the rural
areas through rural electrification; empower and strengthen the
NEA to pursue the electrification program and bring electricity,
through the electric cooperatives as its implementing arm, to the
countryside even in missionary or economically unviable areas; and
empower and enable electric cooperatives to cope with the changes
brought about by the restructuring of the electric power industry
pursuant to Republic Act No. 9136, otherwise known as the
“Electric Power Industry Reform Act of 2001.”


Section 3. Definition of Terms. As used in this Act:

a. Accumulated - means gathered or collected together in an
increasing quantity;

b. Accrued - means gain, addition or increment;

c. Condonation - refers to the relief granted by law in the
payment of unpaid interest and surcharges;

d. Loan restructuring — refers to the process where the principal
terms and conditions of the original loan are modified in
accordance with an agreement setting forth the new schedule
of payment;

e. NORSAMELCO -— refers to Northern Samar Electric
Cooperative, Inc;

f. Power bill - refers to the statement of account indicating the
products, quantities and prices for the products and/or prices
provided by the seller to the buyer;

g. PSALM - refers to the power supplier Power Sector Assets and
Liabilities Management Corporation

Section 4. Condonation of Interests and Surcharges. The
interests and surcharges due as well as other interests that may
accrue on the principal loan secured by Northern Samar Electric
Cooperative, Inc. (NORSAMELCO) payable to Power Sector Assets
and Liabilities Management Corporation (PSALM) incurred from.
2003, in whatever accumulated amount or sum of interest and
surcharges as there may be is hereby condoned, thereby
perpetually relieving NORSAMELCO from payment thereof.

The amount paid in the sum of one hundred sixty-five million
nine hundred four thousand seventy-eight pesos
(P165,904,078.00), which was applied in payment of interests and
surcharges, shall be applied to, and deducted from the outstanding
balance of six hundred sixty-seven million three hundred seventy
thousand three hundred ninety-six pesos (P 667,370,396.00)
instead.

Section 5. Restructuring of loan. The principal terms and
conditions of the remaining balance of the loan in the sum of five
hundred one million four hundred sixty-six thousand three


hundred eighteen pesos (P 501,466,318.00) are hereby modified
and restructured.

The loan shall be paid free of interest in twenty (20) years with
monthly amortization of two million three hundred twenty-one
thousand six hundred three pesos (P2,321,603.00) or equivalent to
yearly payment of twenty-seven million eight hundred fifty-nine two
hundred forty pesos (P27,859,240.00) with two (2) years grace
period.

During the said grace period, NORSAMELCO shall pay its
current power bill to PSALM. On the third year, which shall be the
commencement of loan payments, the current power bill shall be in
addition to the monthly amortization of two million three hundred
twenty-one thousand six hundred three pesos (P2,321,603.00).

Section 6. Effectivity. This Act shall take effect fifteen (15)

days after its publication in at least two (2) newspapers of general
circulation.

Approved.