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FIFTEENTH CONGRESS OF THE REPUBLIC) 
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OF THE PHILIPPINES 
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Third Regular Session 
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SENATE 
3250 
s. B. No. ---------
Introduced by Senato.· Sergio R Osmeiia III 
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EXPLANATORY NOTE 
The Electric Power Industry Reform Act of2001 or the EPIRA created the Power Sector 
Assets and Liabilities Management Corporation (pSALM Corp.) with the principal purpose of 
managing the sale, disposition and privatization of the National Power Corporation (NPC) assets 
and lPP contracts with the greater objective of managing the NPC financial obligations in an 
optimal manner. 
Ten (10) years thereafter, PSALM Corp. has privatized more than seventy percent (70%) 
of the NPC generation assets and lPP contracts, and has optimally liquidated US$5.62 Billion of 
the NPC financial obligations out of the sales proceeds of the privatized assets amounting to 
US$5.51 Billion as of the end of 2011 (excluding interest income from its placements). The 
outstanding financial obligations still stand at US$17.14 billion as of June 2011, broken down 
into US$8.49 billion debts and US$8.65 billion lPP obligations. 
The calculated Stranded 
Contract Costs for 2007 to 2010, and Stranded Debts for 2011 to 2026 are estimated to reach a 
total Php140.29 billion after deducting the Php200 billion NPC obligations assumed by the 
National Government and expected privatization proceeds. 
Extending the corporate life of 
PSALM by ten (10) years, or until 2036, will allow the Corporation to better manage its 
remaining liabilities and lPP contract obligations. 
Despite the fact that there was privatization and National Government absorption, total 
financial obligations have not decreased significantly since the EPIRA was enacted due to the 
following factors: 
Continuous operations ofNPC generating assets at a loss, which consequently resulted in 
new debts; 
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Power rates/tariff not reflective of true cost of electricity; 
Commissioning of new IPPs in 2001-2003 and in 2006; 
Delay in privatization (2004) due to conditions precedent required to complete the sale 
process (e.g., resolution of plant-specific issues); 
Foreign exchange losses; and, 
Mismatch between the maturity profile of the financial obligations and the schedule of 
collection of the privatization proceeds. 
The EPIRA provides that PSALM Corp. shall exist for a period of twenty five (25) years 
from the effectivity of the Act which shall be up to the year 2026. All outstanding NPC debts 
transferred to PSALM will mature by the year 2036 while the longest term for the NPC-IPP 
Contracts transferred to PSALM will end in 2031. After 2026, all outstanding debts and IPP 
contract costs will revert to and be assumed by the National Government, including the 
management of the remaining IPP contracts and/or their administration under the IPPA. 
In the performance of its functions and for the attainment of its objectives, additional 
powers for tbe PSALM Corp. are being proposed, to wit: 
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The power to reorganize, as it may deem appropriate, to effect economy and promote 
efficiency by right sizing the PSALM organization in proportion to the scale, scope 
and nature of its corporate programs and priorities. It is submitted that the exercise of 
the power to reorganize must be expressly granted/authorized by law, based on 
several CSC Rulings on the implementation of Government Reorganization. 
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The power to reassign officials and employees in accordance with the changes in its 
existing functions shall provide the Corporation with the basis to implement job 
rotation which is the sequential or reciprocal movement of an employee from one 
government office to another or from one division to another within the same agency 
as a means of developing and enhancing the potentials of personnel by exposing them 
to the other work functions of the Corporation. 
Consistent with the proposed power of the Corporation to reorganize, the President and 
CEO of PSALM Corp. shall also have the additional power to submit a reorganization plan to the 
Board for its approval, consistent with its mandate under the EPIRA, and to implement the said 
plan within six (6) months from approval of the Board thereof, subject to the guidelines and 
policies set by the Board. This is to expressly authorize the PSALM President and CEO to plan, 
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secure the Board approval and implement the reorganization within a specified time period and 
in accordance with Board-approved policies and guidelines. 
The implementation of any approved reorganization plan for PSALM Corp. will result in 
the displacement or separation of its employees from the service, hence, it is proposed that 
PSALM employees displaced or separated from the service shall be entitled to avail of the 
privileges provided under a separation plan and all other benefits in accordance with existing 
laws, rules and regulations and in no case shall there be any diminution of benefits under the 
separation plan until the full implementation of the approved Reorganization Plan. The proposed 
separation plan is consistent with what has been provided under the EPIRA to NPC and other 
government agencies affected by the electricity industry restructuring. 
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Ai.~r 
S'G~O OSMENA III 
Senator 


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FIFTEENTH CONGRESS OF THE REPUBLIC 
OF THE PHILIPPINES 
Third Regular Session 
SENATE 
) 
) 
~, ." 
S.B. No. 
3250 
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Introduced by: Senator Sergio Osmena III 
AN ACT EXTENDING THE LIFE OF, STRENGTHENING AND REORGANIZING 
THE POWER SECTOR ASSETS AND LIABILITIES MANAGEMENT 
CORPORATION, AMENDING FOR THE PURPOSE REPUBLIC ACT NO. 9136, 
AND FOR OTHER PURPOSES 
Be it enacted by the Senate and the House of Representatives of the Philtppines In 
Congress assembled: 
SECTION 1. Section 50, Chapter VI of Republic Act No. 9136, otherwise known as the 
"Electric Power Industry Reform Act of 2001" or EPIRA, is hereby amended to read as 
follows: 
"SEC. 50. Purpose and Objective, Domicile and Term of Existence - The principal 
purpose of the PSALM Corp, 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 standard contract costs in an 
optimal manner. 
The PSALM Corp. shall have its principal office and place of business within Metro 
Manila. 
The PSALM Corp. shall exist for a period of THIRTY FIVE (35) years from the 
effectivity of this Act, unless otherwise provided by law, and all assets held by it, all 
moneys and properties belonging to it, and all its liabilities outstanding upon the 
expiration of its term of existence shall revert to and be assumed by the N ationa! 
Government. " 
SECTION 2. Section 51(h), Chapter VI of the EPIRA is hereby amended to read as 
follows: 
"SEC. 51. Powers - The PSALM Corp. shall, in the performance of its functions and 
for the attainment of its objective, have the following powers: 


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(h) To appoint or hire, transfer, remove and fix the compensation of its personnel IN 
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ACCORDANCE WITH ITS FUNCTIONS AND APPLICABLE RULES AND 
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REGULATIONS, AND TO REORGANIZE THE CORPORATION OR REASSIGN 
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OFFICIALS AND EMPLOYEES, AS IT MAY DEEM PROPER: Provided, however, 
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That the Corporation shall hire its own personnel only if absolutely necessary, and as far 
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as practicable, shall avail itself of the services of personnel detailed from other 
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government agencies;" 
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SECTION 3. Section 53(g), Chapter VI, of the EPIRA is hereby amended and a new 
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section, to be designated as Section 53(h), Chapter VI, is hereby inserted to read as follows: 
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"SEC. 53. Powers of the President of PSALM Corp. - The President of the PSALM 
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Corp. shall be appointed by the President of the Philippines. In the absence of the 
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Chairman, the President shall preside over Board meetings. 
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The President of the PSALM Corp. shall be the Chief Executive Officer of the 
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PSALM Corp. and shall have the following powers and duties: 
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(g) TO SUBMIT A REORGANIZATION PLAN TO THE BOARD FOR THE 
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PSALM CORP. CONSISTENT WITH ITS MANDATE UNDER TIDS ACT AND 
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UPON APPROVAL THEREOF, TO IMPLEMENT THE SAID PLAN SUBJECT TO 
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THE GUIDELINES AND POLICJES SET BY THE BOARD. THE PLAN SHALL BE 
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IMPLEMENTED WITHIN SIX (6) MONTHS FROM THE BOARD'S APPROVAL; and 
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(H) To exercise such other powers and duties as may be vested in him by the Board 
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from time to time. 
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SECTION 4. 
Section 6, Chapter VIII, of the EPlRA is hereby amended to read as 
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follows: 
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" SEC. 63 - Separation Benefits of Officials and Employees of Affected Agencies. -
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National government employees displaced or separated from the service as a result of the 
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restructuring of the electricity industry and privatization of NPC assets pursuant to this 
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Act, AND EMPLOYEES OF THE PSALM CORP. SEPARATED AS A RESULT OF 
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THE IMPLEMENTATION OF THE APPROVED REORGANIZATION PLAN, shall be 
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entitled to either a separation pay and other benefits in accordance with existing laws, 
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rules or regulations or be entitled to avail of the privileges provided under a separation 
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plan which shall be one and one-half month salary for every year of service in the 
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government, AND ALL OTHER BENEFITS IN ACCORDANCE WITH EXISTING 
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LAWS, RULES OR REGULATIONS: Provided, however, That those who avail of such 
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privileges shall start their government service anew if absorbed by any government-owned 
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successor company. In no case shall there be any diminution of benefits under the 
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separation plan until the full implementation of the restructuring and privatization ofNPC 
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ASSETS, AND THE APPROVED REORGANIZATION PLAN FOR PSALM 
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EMPLOYEES. 
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Displaced or separated personnel as a result of privatization, if qualified, shall be 
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given preference in the hiring ofthe manpower requirements of the privatized companies. 
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The salaries of employees of NPC shall continue to be exempt from the coverage of 
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Republic Act No, 6758, otherwise known as "The Salary Standardization Act". 
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With respect to SEPARATED employees OF THE NATIONAL GOVERNMENT, 
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NPC OR PSALM CORP" the Government, through the Department of Labor and 
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Employment, shall endeavor to implement retraining, job counseling, and job placement 
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programs." 
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SECTION 5. 
Separability Clause. - If any part or section of this Act is declared 
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unconstitutional, such declaration shall not affect in any manner other parts or sections of 
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this Act. 
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SECTION 6. Repealing Clause. - The provisions of Republic Act No, 9136, otherwise 
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known as the "Electric Power Industry Reform Act of 2001" shall continue to have full 
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force and effect except insofar as they are inconsistent with this Act. 
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SECTION 7. Effectivity Clause. - This Act shall take effect on the fifteenth day 
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following its publication in at least two (2) national papers of general circulation. 
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Approved, 
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