SMC power unit denies it has ‘unpaid’ obligations to PSALM

by Lenie LecturaJuly 21, 2016

from Business Mirror

SAN Miguel Global Power, through its unit South Premier Power Corp. (SPPC), dismissed erroneous claims made recently by the Power Sector Assets and Liabilities Management Corp. (PSALM) of its alleged unpaid obligations for the generated capacity of its Ilijan power plant.

The power firm reiterated it has already paid a total of P159.67 billion to PSALM as of April 2016.

“This is precisely the reason 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 it Independent Power Producer Administration [Ippa] agreement with the government,” San Miguel Global said on Thursday.

A government source earlier said SPPC owes PSALM P12.3 billion in unpaid power-generation fees as of April this year.

The source said the amount includes a P7.8-billion disputed amount, which SPPC, administrator of the Ilijan natural gas plant, claimed it already paid.

The P12.3 billion is from June 2010 to April 2016. If only the disputed—this is starting December 2012—the amount now is P7.8 billion, from P6 billion as per the demand letter in the case,” the source said. “This outstanding amount is the accumulated shortfalls in San Miguel’s payment of its monthly obligations to date.”

On September 8, 2015, SPPC was constrained to file a complaint before the Regional Trial Court (RTC) in Mandaluyong against PSALM due to a willful breach of contract, arising from what SPPC believes is a flawed interpretation of certain provisions related to its generation payments under the Ilijan Ippa agreement. PSALM’s unfounded interpretation has resulted in alleged shortfall in generation payments by SPPC. The case also sought to stop PSALM from illegally terminating SPPC’s Ilijan Ippa and treating the latter as an administrator in default. On the same date, the RTC issued a 72-hour  temporary restraining order against PSALM.

On September 15, 2015, the court issued an order granting a preliminary injunction enjoining PSALM from proceeding with the termination of the Ilijan Ippa agreement with SPPC while the main case is pending.

SPPC earlier cautioned the illegal termination could lead to higher electricity prices, as PSALM reportedly plans to trade the output of Ilijan on the Wholesale Electricity Spot Market. SPPC assured consumers prices will remain stable as long as status quo is maintained. San Miguel Global called on PSALM to refrain from issuing misleading statements related to the case. “Let’s wait for the court to decide and respect the status quo, as the court has thus far ordered.”

SPPC 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 SPPC’s Ilijan Ippa.