By Myrna M. Velasco
A recent ruling of the Supreme Court (SC) has freed state-run Power Sector Assets and Liabilities Management Corporation (PSALM) of ₱9.566 billion worth of value-added tax (VAT) payments on the privatized assets of the National Power Corporation.
PSALM President Irene Joy B. Garcia stipulated that the company “received favorable resolution from the Supreme Court,” and that warranted the cancellation of the assessment of the Bureau of Internal Revenue (BIR) on its supposed VAT payments on the power facilities that it had divested over the years.
She noted the BIR assessment had been reckoned as “deficiency VAT for taxable year 2008,” the same timeframe when massive number of the power assets of NPC had been privatized or sold to private sector takers.
The PSALM chief executive explained the high court has rendered that “the sale by PSALM pursuant to (its) mandate under EPIRA (Electric Power Industry Reform Act) to privatize NPC assets is not subject to VAT because such sale is not in pursuit of a commercial or economic activity but rather a government function mandated by law.”
Under the power industry reform law, PSALM has the mandate to divest the generating assets, power supply contracts as well as privatize through a 25-year concession arrangement the assets and facilities of the National Transmission Corporation.
The divestment of the NPC assets peaked within the years 2006 to 2010 – starting with the power generating facilities; then the supply agreements and the transfer of the transmission assets to concessionaire National Grid Corporation of the Philippines in 2009.
From the sale and privatization of the NPC assets, PSALM already fetched a total of ₱908.78- billion proceeds. Out of that, ₱579.97 billion had so far been collected; while the balance of ₱319.22 billion will still flow into the company’s coffers over the remaining extent of its corporate life which will be until 2026.
For the concession deal on the transmission facilities in particular, PSALM data would show that it would still have remaining collections of ₱84.48 billion in concession fees; while the bulk of ₱183.32 billion had already been remitted to the state-run firm.
On the privatized supply deals which had been handed over to the charge of independent power producer administrators (IPPAs), the remaining collections hover at ₱235.823 billion; while the fraction already paid to PSALM amounted to ₱234.76 billion.
For the privatized power plant assets, the state-owned firm raked in and collected in full ₱162.25 billion while the ₱640-million proceeds from decommissioned assets had also been fully remitted.
PSALM still has stream of assets to sale in its remaining corporate life cycle of six years and these are combination of power generating facilities, real estate assets as well as the planned redevelopment of the Napocor complex in Quezon City.