SMC subsidiary claims payments on ilijan plant reaches P160 billion

by Myrna Velasco – July 22, 2016

from Manila Bulletin

The subsidiary of San Miguel Corporation (SMC) administering the 1,200-megawatt Ilijan natural gas-fired power plant already made payments reaching P159.67 billion as of April this year.

The company has announced this to media as it refuted the claims of Power Sector Assets and Liabilities Management Corporation (PSALM) of supposed underpayments of roughly P12.3 billion on the asset.

This is in view of the Independent Power Producer Administrator (IPPA) contractual arrangement that the SMC subsidiary had inked with PSALM on the Ilijan plant.

San Miguel Global Power Holdings said it debunks PSALM’s claim on the continuous billing on underpayments, branding the reports as “erroneous.”

SPPC said “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.”

It added “we have been diligently paying PSALM what is due us. We do not owe PSALM a single centavo.”

The San Miguel subsidiary added it has “fully paid all its obligations under its IPPA with government.” IPPA had been the mode of privatization undertaken by government through PSALM on the contracted capacity of the Ilijan plant.

It emphasized that around September last year, “SPPC 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 SPPC believes is a flawed interpretation of certain provisions related to its generation payments under the IPPA agreement.”

SPPC stressed “PSALM’s unfounded interpretation has resulted in alleged shortfall in generation payments by SPPC.”

The company stipulated that the case “also sought to stop PSALM from illegally terminating SPPC’s Ilijan IPPA and treating the latter as an administrator in default.”

The SMC firm also cautioned previously that “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.”