Ang wants Ilijan plant turnover in 2022

By Myrna M. Velasco – May 20, 2018, 10:00 PM
from Manila Bulletin

Businessman Ramon S. Ang has categorically said that the 1,200 megawatt Ilijan plant must be turned over to them coherently and without impediments at the lapse of its build-operate transfer (BOT) contract with government in 2022.

At the lapse of its build-operate-transfer (BOT) contract with government in 2022, the South Premiere Power Corporation (SPPC) unit of San Miguel Corporation is eyeing turnover of the 1,200-megawatt Ilijan plant to them coherently and without impediments.

“The plant must be turned over to us, that’s without question. We’ve already paid them (government) that much,” Ang declared, in reference to the payments they have been remitting to the Power Sector Assets and Liabilities Management Corporation (PSALM) corresponding to the Ilijan plant’s independent power producer (IPP) contract.

Under the multi-layered contracts and terms of reference of the privatization of the IPP supply deals, the power plants must be turned over to the IPP Administrators (IPPAs) at the lapse of their BOT contracts at “zero value.” In the case of the Ilijan plant, the IPPA is with South Premier Power Corp. (SPPC) of SMC and turnover date is due in 2022.

Ang emphasized “I think it should be resolved by the Court…because where in the world have you seen a contract that they will only respect the ‘baseload capacity calculation basis’ in the contract when it is favorable to them (government); but when prices surged in November-December 2013, they suddenly billed us R18 billion?”

A legal dispute ensued when PSALM demanded payment and continuously billed the SMC unit for R18 billion on alleged ‘unsettled obligations’ relative to the plant’s IPPA deal.

However, SMC fiercely contested that and had elevated the case to the Courts. Until now, that is still awaiting judicial ruling.

Ang said the calculation of the tariffs – being the basis of SPPC’s payments of obligations to PSALM, “had not been consistent, because PSALM wanted it referenced on the WESM (Wholesale Electricity Spot Market) rates only when there were price spikes.”

The SMC executive stressed that the government-run firm “must be consistent…if it wants WESM to be the basis of its pricing calculation, then it should be WESM all throughout, even at this time when prices are very low. Because at this point, I am sure they will be incurring a lot of losses.”

Ang emphasized “our point is, if they really want to base Ilijan rates on WESM, then we should start the calculation from December, 2013 and then maintain it as such… the basis of calculation shouldn’t be changing on a whim.”

The Ilijan plant is currently under the operation and maintenance (O&M) charge of Korea Electric Power Corporation (Kepco), the project developer under the BOT contract that was originally sealed with the National Power Corporation (NPC) back in the 1990s.

The ownership will then shift from government (PSALM being the transferee-firm of NPC assets) to the IPPA, which in Ilijan’s case will be SPPC of the San Miguel group.