THE Power Sector Assets and Liabilities Management (PSALM) Corp. and Phinma Energy Corp. have agreed to terminate the Independent Power Producer Administrators (Ippa) agreement for the 40-megawatt (MW) strip of energy of the Unified Leyte Geothermal Power Plant (ULGPP).As such, Phinma Energy said it will withdraw the case it filed earlier and no further claims will be pursued.
In September last year, Phinma Energy filed before a Regional Trial Court in Makati a civil case for damages and annulment of the agreement with prayer for a writ of preliminary injunction/writ of preliminary mandatory injunction and temporary restraining order.
“The termination allows the company to improve its supply costs while maintaining a diversified portfolio,” Phinma said on Tuesday. “The company has settled all its obligations with Psalm.”
Phinma Energy, then Trans-Asia Oil and Energy Development Corp., was declared as one of the winning bidders with the right to administer 40-MW ‘strips of energy’ from the ULGPP in Tongonan, Leyte.
On November 8, 2013, Typhoon Yolanda severely hit Region 8, which resulted in extensive damage to the ULGPP. It was only after a one-year delay that Psalm awarded the strips to the bidders. The administrators wrote Psalm expressing the difficulties they suffered under the agreement.
However, PSALM said investors knew the risks involved.
“PSALM ensures that the final Ippa aas equitably represent sides of involved parties, and is certain that investors before acceptance of the Ippa [agreements] have well-thought of and considered the market risks inherent in the business and have studied business strategies that will allow them to yield profit margins.”
PSALM Officer in Charge Lourdes Alzona earlier pointed out that any deficiencies in obligations on the part of Ippas are addressed according to the terms stipulated under the Ippa [agreement]. Moreover, discussions and agreements between PSALM and the Ippas are all elevated to the PSALM Board for final direction before these become relevant and binding.
“As to the implementation of [the ULGPP], through PSALM trading strategies, it is ensured that the strips of energy are fully dispatched, providing Ippas security from market volatility.
PSALM assists Ippas in their bilateral contract applications with the Energy Regulatory Commission by providing them support documents used as basis for approval by the regulatory body,” the state firm added.