PSALM’s claims ‘erroneous’

by Alena Mae S. Flores – July 21, 2016 at 11:45 pm

from Manila Standard Today

SMC Global Power Corp., through unit South Premier Power Corp., on Friday dismissed as “erroneous” the P12.3-billion unpaid claims of Power Sector Assets and Liabilities Management Corp. from the 1,200-megawatt Ilijan natural gas power plant.

SMC Global said in a statement it already paid as of April 2016 P159.67 billion to PSALM, which manages the assets and liabilities of National Power Corp.

SMC Global’s subsidiary South Premiere Power Corp. is the the independent power producer administrator of the  Ilijan natural gas power plant in Batangas.

“This is precisely the reason why we filed a case against PSALM last year—to seek justice from the court, clear the confusion and set the facts straight. We have been diligently paying PSALM what is due us. We do not owe PSALM a single centavo. SPPC has fully paid all its obligations under its Independent Power Producer Administration Agreement with government,” San Miguel Global said.

On Sept 8, 2015, South Premiere was constrained to file a complaint before the Regional Trial Court of Mandaluyong against PSALM due to a willful breach of contract arising from what the company believed was a flawed interpretation of certain provisions related to its generation payments under the Ilijan IPPA agreement.

SMC Global said PSALM’s “unfounded interpretation” had resulted in alleged shortfall in generation payments by South Premiere. The case also sought to stop PSALM from illegally terminating South Premiere’s Ilijan IPPA and treating the latter as an administrator in default.

The Mandaluyong RTC therefore issued a 72-hour TRO against PSALM.

On Sept. 15, 2016, the court issued an order granting a preliminary injunction enjoining PSALM from proceeding with the termination of the Ilijan IPPA agreement with South Premiere while the main case was pending.

South Premiere earlier cautioned that the illegal termination could lead to higher electricity prices, as PSALM reportedly planned to trade the output of Ilijan on the Wholesale Electricity Spot Market.

South Premiere assured consumers prices would remain stable as long as status quo was maintained

“Let’s wait for the court to decide and respect the status quo as the court has thus far ordered,” SMC Global said. South Premiere filed criminal complaints for estafa and violation of the anti-graft and corrupt practices act against officers of PSALM in connection with the earlier termination of the Ilijan IPPA.

“On the part of the government, we maintain that any disposition made by SMC will be subject to the claims of PSALM unless otherwise adjudged by the ours,” Energy Secretary Alfonso Cusi said earlier.

PSALM is led by the finance secretary as chairman and Cusi as co-chairman.

The Ilijan natural gas plant is one of the three natural gas power plants in Batangas. It is operated by Kepco Philippines for the government, but its contract is managed by South Premiere under an IPPA agreement with PSALM.

South Premiere won the contract as the independent power producer administrator of the Ilijan plant during a bidding conducted by PSALM in 2010 with an offer of $870 million.