D.O.F. calls D.O.E.-PSALM, SMC to mediation meeting

by Lenie Lectura – December 8, 2015

from Business Mirror

THE Department of Finance (DOF) has asked for a meeting with the Department of Energy (DOE) and the Power Sector Assets and Liabilities Management Corp. (PSALM) to discuss the dispute between the latter and San Miguel Corp. (SMC).

“The DOF is asking to sit down with the DOE and PSALM. There is no schedule yet but this will happen,” Energy Secretary Zenaida Monsada said.

Monsada said the impending meeting is not going to be part of the agenda in the next PSALM Board meeting. Instead, the DOE chief said that “it will be just the three of us.”

The DOF, headed by Secretary Cesar V. Purisima, is the chairman of the PSALM Board. Monsada, as DOE secretary, is the vice chairman of the PSALM Board.

Other board members include the secretaries of the departments of Budget and Management, Justice, and Trade and Industry.

“PSALM is government. We will know if may pagkukulang ba ito o sobra ba siya,” Monsada said.

There are two different disputes involving power contracts of SMC’s power units.

The first dispute involves South Premiere Power Corp. (SPPC), a unit of SMC Global Power and the administrator of the Ilijan power plant.

PSALM had terminated SPPC’s Independent Power Producer Administrator (Ippa) contract because the latter failed to pay the outstanding generation payments from December 26, 2012 to April 25, 2015 amounting to P6.46 billion, the state firm said.

As part of PSALM’s decision to terminate the contract, the state firm also moved to seize the $60-million performance bond of SPPC.

However, SMC was able to score a preliminary injunction against PSALM. In September the Regional Trial Court in Mandaluyong City Branch 208 issued a preliminary injunction order in favor of SPPC.

The order enjoins PSALM “from further proceeding with the termination of the Ippa agreement between SPPC and PSALM while the main case is pending.” This means PSALM cannot cancel the contract “for the duration of the trial until a decision on the merits is reached,” SMC said.

The other dispute involves the plunder charges filed against PSALM by SMC’s power arm.

San Miguel Energy Corp. (SMEC) sued PSALM President Lourdes Alzona for granting the “excess capacity” of the Sual, Pangasinan, power plant to the independent power producers (IPPs) Team Philippines Energy Corp. and Team Sual Corp.

SMEC is the Ippa of the 1,218- megawatt Sual power plant. It was built by Team Energy Corp. under a build-operate-transfer with the government that will expire in 2024.

PSALM and Team Energy signed a memorandum of agreement covering the Sual power plant’s excess capacity.

When the output of the plant was bidded out, PSALM imposed the same agreement on SMEC as the Ippa Starting November 2009, Team Energy used the agreement as basis to claim payments for excess generation from SMEC.

SMEC said if there was any excess capacity from the Sual plant, it should be the government who should benefit and not the IPP of the plant.