THE Power Sector Assets and Liabilities Management Corp. (Psalm) expects to save P822 million from the issuance of Executive Order (EO) 157, which authorizes the reduction of the 2021 real property tax (RPT).
The RPT applies to 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).
Psalm’s current contracts with IPPs include contracts with the following: 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.
“We are very thankful that President Duterte signed EO 157. With this, Psalm’s 2021 RPT obligations amounting to about P1.019 billion at 80-percent assessment rate, would be reduced to about P200 million at 15-percent assessment rate,” Psalm President and CEO Irene Joy J. Besido-Garcia.
This would translate to an estimated savings of P822 million for Psalm, which amount can then be utilized by the firm for the payment of other maturing obligations assumed from the National Power Corp. (NPC).
EO 157 is especially significant to Psalm as it is a counterparty to several BOT contracts by virtue of Republic Act 9136, or the Electric Power Industry Reform Act of 2001 (Epira). Under the Epira, the BOT contracts of NPC obligations were transferred to Psalm, including the responsibility to pay the RPT obligations of the IPPs.
Through EO 157, the RPT assessment level is reduced to 15 percent of the fair market value of the property, machinery and equipment, depreciated at two percent 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.
