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PIA Press Release
2007/09/13

RP, JBIC-JEXIM sign power asset transfer agreement

Manila (13 September) -- The government's thrust to accelerate the power privatization program was further boosted after the Japan Bank for International Cooperation-Export-Import Bank of Japan (JBIC-JEXIM) gave its consent to the transfer of the generation assets and debts of the National Power Corp. to the Power Sector Assets and Liabilities Management Corp. (PSALM). The JBIC-JEXIM consent also included the transfer of the transmission assets of National Power to the National Transmission Corporation (TransCo) and, by PSALM, the sale of the generation assets and, by way of concession, the transmission assets to investors.

JEXIM Loan Department 1 director general Toyoaki Fujita represented JBIC-JEXIM in the signing of the Consent and Amendment Agreement (CAA) held last 03 September 2007. Signatories for the Philippine panel included Finance Secretary Gary B. Teves, PSALM president and chief executive officer Jose C. Ibazeta, National Power president Cyril C. Del Callar, and TransCo president Arthur N. Aguilar.

With the signing of the JEXIM CAA for the commercial loans extended by JBIC to National Power, PSALM is now halfway through JBIC's full approval of the government's power asset transfer and privatization. The consent of the JBIC's Overseas Economic Cooperation Fund (OECF), which handles the official development assistance by the Japanese government, will signify the creditor's full consent.

PSALM disclosed that negotiations on the CAA with JBIC-OECF are ongoing. The government's power privatization firm expects the agreement to be consummated before the end of 2007.

As stipulated in the Electric Power Industry Reform Act of 2001, PSALM is required to secure the consents of National Power's major creditors before it could effect the sale and transfer of any government-owned power asset.

JBIC is the third and final major creditor to give its consent to the transfer of the generation assets and liabilities of National Power to PSALM and the transfer of the transmission assets of National Power to TransCo.

On 26 February 2007, the World Bank formally granted its approval to the transfer of the debts and generation assets of National Power to PSALM and the transfer of the transmission assets of National Power to TransCo and, by PSALM, the sale of the generation assets and, by way of concession, the transmission assets to investors.

The first consent was granted to the government on 03 March 2006 through the Omnibus Amendment Agreement (OAA) it signed with the Asian Development Bank (ADB). The OAA provided ADB's consent to the transfer of the assets of National Power to PSALM and TransCo, and the assumption by PSALM of all loan obligations of National Power with the ADB. The OAA amended all loan agreements between ADB and National Power to reflect these consents.

Without the consents of National Power's major creditors, PSALM seeks specific creditor consent for each plant it bids out. (PIA-MMIO) [top]

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