Chapter 5

Privatization Of The Assets Of The National Power Corporation

Section 47. NAPOCOR Privatization

Except for the assets of SPUG, the generation assets, real estate, and other disposable assets as well as IPP contracts of NAPOCOR shall be privatized in accordance with this Act.

Within 6 months from the effectivity of this Act, PSALM shall totally privatize of the generation assets, real estate, other disposable assets as well as existing IPP contracts of NAPOCOR as long as:

  • The privatization value to the National Government of the NAPOCOR generation assets, real estate, other disposable assets, IPP contracts shall be optimized
  • The participation by Filipino citizens and corporations in the purchase of NAPOCOR assets shall be encouraged
    • At least 75% of the money paid by foreign investors for the NAPOCOR assets and IPP contracts shall be remitted to the Bangko Sentral ng Pilipinas.
  • c) The NAPOCOR plants and/or IPP contracts assigned to IPP Administrators, its related assets and assigned liabilities, if any, shall be grouped in a manner which shall promote the viability of the resulting generation companies (gencos), ensure economic efficiency, encourage competition, foster reasonable electricity rates and create market appeal to optimize returns to the government from the sale and disposition of such assets in a manner consistent with the objectives of this Act. In the grouping of the generation assets and IPP contracts of NAPOCOR, the following criteria shall be considered:
  1. A sufficient scale of operations and balance sheet strength to promote the financial viability of the restructured units;2) Broad geographical groupings to ensure efficiency of operations but without the formation of regional companies or consolidation of market power
  2. Portfolio of plants and IPP contracts to achieve management and operational synergy without dominating any part of the market or of the load curve
  3. Such other factors as may be deemed beneficial to the best interest of the National Government while ensuring attractiveness to potential investors.
  • All assets of NAPOCOR shall be sold in an open and transparent manner through public bidding, and the same shall apply to the disposition of IPP contracts
  • In cases of transfer of possession, control, operation or privatization of multi-purpose hydro facilities, safeguards shall be prescribed to ensure that the national government may direct water usage in cases of shortage to protect potable water, irrigation, and all other requirements imbued with public interest;
  • The Agus and the Pulangui complexes in Mindanao shall be excluded from among the generation companies that will be initially privatized.

Their ownership shall be transferred to the PSALM Corp. and both shall continue to be operated by the NAPOCOR. Said complexes may be privatized not earlier than ten (10) years from the effectivity of this Act, and except for Agus III, shall not be subject to Build-Operate-Transfer (B-O-T), Build-Rehabilitate-Operate-Transfer (B-R-O-T) and other variations thereof pursuant to Republic Act No. 6957, as amended by Republic Act No. 7718. The privatization of Agus and Pulangui complexes shall be left to the discretion of PSALM Corp. in consultation with Congress;

  • The steamfield assets and generating plants of each geothermal complex shall not be sold separately. They shall be combined and each geothermal complex shall be sold as one package through public bidding. The geothermal complexes covered by this requirement include, but are not limited to, Tiwi-Makban, Leyte A and B (Tongonan), Palinpinon, and Mt. Apo
  • The ownership of the Caliraya-Botokan-Kalayaan (CBK) pump storage complex shall be transferred to the PSALM Corporation;
  • Not later than three (3) years from the effectivity of this Act, and in no case later than the initial implementation of open access, at least seventy percent (70%) of the total capacity of generating assets of NAPOCOR and of the total capacity of the power plants under contract with NAPOCOR located in Luzon and Visayas shall have been privatized: Provided, That any unsold capacity shall be privatized not later than eight (8) years from the effectivity of this Act
  • NAPOCOR may generate and sell electricity only from the undisposed generating assets and IPP contracts of PSALM Corp. and shall not incur any new obligations to purchase power through bilateral contracts with generation companies or other suppliers.

Section 48. National Power Board of Directors

This amends RA 6395 and Section 13 of RA 7638 to create a new Board composed of:

  • the Secretary of Finance as Chairman
  • Members:
    • the Secretary of Energy
    • the Secretary of Budget and Management
    • the Secretary of Agriculture
    • the Director-General of the NEDA
    • the Secretary of DENR
    • the Secretary of DILG
    • the Secretary of DTI
    • the President of NAPOCOR

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