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FOR IMMEDIATE RELEASE CONTACT: Phil Gielczyk
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U.S. Investors Hail Passage of Philippine Power Reform Bill
(Manila) U.S. investors have lauded the passage of the Philippine Electric Power Reform Act, which was passed by the Philippine Congress on June 4. The legislation has been viewed by foreign investors as a key benchmark in President Arroyo's effort to promote competitiveness in the Philippine economy.
The newly passed bill provides the legal framework for the restructuring of the electric power industry and the privatization of the assets and liabilities of Napocor. It also creates four (4) divisions: generation, transmission, distribution and supply. The generation and distribution sectors will be opened to competition while the transmission sector will be assumed by the proposed National Transmission Corporation.
Under the bill, Napocor's financial obligations will be assumed in part by the National Government, which would pay not more than 200 billion pesos ($4 billion) of Napocor's debts. Any unpaid debts in excess of the 200 billion will be passed on to consumers as part of a proposed universal charge. The bill also provides for the condonation of the 19 billion peso in debts of the National Electrification Administration (NEA). NEA will also be transferred to the proposed Power Sector Assets and Liabilities Management Corp. (PSALM), the body which will own all existing generation assets, liabilities, contracts with independent power producers (IPPs) and other assets of Napocor before they are sold to private investors.
According to the bill's sponsor, Senator John Osmena, most of the credit for the bill's passage must be attributed to President Arroyo herself whose "hands-on" leadership ensured the bill's passage. In addition to sending a strong signal to the investor community, passage of the bill will also result in the release of both pending and new loans from the Asian Development Bank (ADB) and the Japanese Import-Export Bank amounting to almost 1 billion USD.
According to U.S.-ASEAN Business Council President Ernie Bower, "The passage of this legislation sends a clear positive signal to American investors that the Philippines is back on the map and that President Arroyo is committed to reform and is able to implement policies that will increase the competitiveness of the Philippine economy."
The US-ASEAN Business Council is the premier national organization in the United States representing U.S. private sector interests in the ten countries of ASEAN, the Association of Southeast Asian Nations.
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