Sixteenth Congress of the Republic)
Of the Philippines )
Second Regular Session

HOUSE OF REPRESENTATIVES

u.No._5776

Introduced by: REP. JOSELLER “YENG” M. GUIAO

EXPLANATORY NOTE.

This bill seeks to restructure the loanobligation and condone all interest due on the
principal loan secured by Pampanga II Electric Cooperative, Inc. (PELCO II) payable to the
Power Sector Assets and Liabilities Management Corporation (PSALM).

In 2003, PELCO II's accounts payable due for its power bills was in the amount of one
hundred eleven million five hundred eightthousand eight hundred fifty six pesos and ninety four
cents (P111,508,856.94).

For more than eight(8) years until September 2010, PELCO Ilwas unable to pay in full its
yearly power bills. As a result, its outstanding balance as of September 2010 with the National
Power Corporation (NPC), including interests, ballooned to one billion four hundred thirty one
million nine hundred forty six thousand nine hundred twenty sevenpesos and thirty seven cents
(P 1,431,946,927.37).

‘The outstanding balance with NPC was restructured with PSALM starting in October
2010.

For the past four (4) years, PELCO Ihas been continuously paying its payables to
PSALM. However, the indebtedness remain onerous at one billion one hundred forty six million
one hundred eighty five thousand one hundred sixty three pesos and fifty seven cents (P
1,146,185,163.57), which included interests added to the balanceamounting to three hundred
thirteen million seven hundred eighty thousand one hundred seventy nine pesos and fifty cents (P
313,780,175.50).

If we total the interest payments to PSALM since October 2010amounting to one
hundred fifteen millionninehundred seventy twothousand five hundred sixty ninepesos and
cighty six cents (P115,972,569.86), plus the interests added to the balance amounting to three
hundred thirteen million seven hundred eighty thousand one hundred seventy nine pesos and
fifty cents (P 313,780,175.50)then apply it to the outstanding balance of one billion one hundred
forty six million one hundred eighty five thousand one hundred sixty three pesos and fifly seven
cents (P 1,146,185,163.57), we can reduce theindebtedness to a remaining balance of seven
hundred sixteen million four hundred thirty two thousand four hundred eighteenpesos and twenty
one cents (P 716,432,418.21).

PELCO Il is heavily burdened by its loan transactionswith the PSALM thus constantly
impeding its mandate to renderefficient service and regular supply of electricity to
Pampanguefios.


‘As shown above, PSALM should be considerate by applyingleniency to PELCO II in its
loan obligation by restructuringthe loan and condoning the interests due as well asother interest
that may accrue therefrom.

Henceforth, the remaining balance of seven hundred sixteen million four hundred thirty
two thousand four hundred eighteen pesos and twenty one cents (P 716,432,418.21) is proposed
tobe paid free of interest within twenty (20) yearswith monthly amortization of two million nine
hundred eighty fivethousand onehundred thirty five pesos and eight cents (P2,985,135.08) or
equivalent toyearly payment of thirty fivemillion eight hundred twenty one thousandsixhundred
twenty pesos and ninety one cents (P 35,821,620.91). All interests due and payable as well
asother interests that may accrue therefrom shall be condoned.

Allowing the current situation to persist will severely hamper the operations of PELCO II
and will lead to the eventual increase in electricity rates that will be shouldered by its customers.
Consequently, the high cost of power in the province will be deter business growth in the area.

Further, it is to be noted that it is through electric cooperativesthat total electrification of
the country is made possible by enhancingdistribution development. It is therefore imperative to
restructurethe indebtedness of ailing electric cooperatives with the view of making
themeconomically and financially viable.

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

ig

JOSELLER“YENG” M. GUIAO
/ Répresentative

ist istrict, Pampanga


Sixteenth Congress of the Republic)

Of the Philippines )
Second Regular Session

HOUSE OF REPRESENTATIVES

u.Nno.__5776

Introduced by: REP. JOSELLER“YENG” M. GUIAO

AN ACT PROVIDING FOR THERESTRUCTURING OF LOAN OBLIGATION AND.
CONDONATION OFALL INTEREST DUE ON THE PRINCIPAL LOAN SECURED
BYPAMPANGA II ELECTRIC COOPERATIVE, INC. (PELCO II)PAYABLE TO THE
POWER SECTOR ASSETS AND LIABILITIESMANAGEMENT CORPORATION (PSALM)

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

Section 1. Title. This Act shall be known as the Pampanga II Electric Cooperative, Inc.
(PELCO IT) Loan Restructuringand CondonationAct. It shall hereinafter be referred to as the Act.

Section 2. Declaration of Policy. It is hereby declared thepolicy of the State to promote
sustainable development in the ruralareas through rural electrification; empower and strengthen
theNational Electrification Agency (NEA) to pursue the electrification program and bring
clectricity,through the electric cooperatives as its implementing arm, to thecountryside even in
missionary or economically unviable areas; andempower and enable electric cooperatives to
cope with the changesbrought about by the restructuring of the electric power industrypursuant
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 anincreasing quantity;
b, Accrued - means gain, addition or increment;

©. Condonation- refers to the relief granted by law inthepayment of unpaid interest and
surcharges;

d. Loan restructuring - refers to the process where the principalterms and conditions of the
original loan are modified inaccordance with an agreement setting forth the new scheduleof
payment;

c. PELCOI!- refers to Pampanga II Electric Cooperative, Ine;

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

g. PSALM - refers to the Power Sector Assets andLiabilities Management Corporation

h. NPC - refers to the power supplier National Power Corporation


Section 4, Condonation of Interests. Theinterests due as well as other interests that
mayaccrue on the principal loan secured by Pampanga IIElectricCooperative, Inc. (PELCO Il)
payable to Power Sector Assetsand Liabilities Management Corporation (PSALM) incurred
fromOctober 2010, in whatever accumulated amount or sum of interestsas there may be is hereby
condoned, therebyperpetually relieving PELCO Ilfrom payment thereof.

‘The interest amount paid in the sum of one hundred fifteen million nine hundred seventy
two thousand five hundred sixty nine pesos and eighty six cents (P 115,972,569.86) and the
amount of interests added to the balance in the sum of three hundred thirteen million seven
hundred cighty thousand one hundred seventy nine pesos and fifty cents (P 313,780,175.50),
shall instead be applied to, and deducted from the outstandingbalance of one billion one hundred
forty six million one hundred eighty five thousand one hundred sixty three pesos and fifty seven
cents (P 1,146,185,163.57).

Section 5. Restructuring of loan. The principal terms andconditions of the remaining
balance of the loan in the sum of seven hundred sixteen million four hundred thirty two thousand
four hundred eighteen pesos and twenty one cents (P 716,432,418.21)are hereby modifiedand
restructured.

‘The loan shall be paid freeof interest within a period of twenty (20) years witha monthly
amortization of two million nine hundred eighty five thousand one hundred thirty five pesos and
eight cents (P2,985,135.08) or equivalent to a yearly payment of thirty fivemillion eight hundred
twenty one thousand six hundred twenty pesos and ninety one cents (P 35,82 1,620.91).

Section 6. Effectivity. This Act shall take effect fifteen (15)days after its publication in at
least two (2) newspaperof generalcirculation.

‘Approved.