posted July 17, 2016 at 11:40 pm by Alena Mae S. Flores
San Miguel Corp. may require the
approval of the government to sell its 49 percent stake in affiliate
South Premiere Power Corp., the independent power producer administrator of the
1,200-megawatt Ilijan natural gas power plant, to Manila Electric Co.
“On the part of the government, we
maintain that any disposition made by SMC will be subject to the claims of
PSALM [Power Sector Assets and Liabilities Management Corp.] unless otherwise
adjudged by the ours,” Energy Secretary Alfonso Cusi said.
A source said that even if there was
no pending case involving the Ilijan contracts, “the clearance of PSALM is
necessary for any planned transfer/assigment of contract.”
The source said the planned sale of
the Ilijan corporate vehicle stake would involve a change of ownership
and needed PSALM approval.
San Miguel confirmed it was in talks
with Meralco “for a possible investment of up to the extent of 49 percent by
Meralco in South Premiere.”
The conglomerate said in a
disclosure to the stock exchange the sale was subject to the resolution of the
pending case initiated by South Premiere against Power Sector Assets and
Liabilities Management Corp.
PSALM manages the assets and
liabilities of National Power Corp. as mandated by the Electric Power Industry
Reform Act of 2001.
“SMC plans to sell 49 percent of
power generating plant. By doing that, we are sure to have market for our power
because our off-take agreement is up to 2022,” San Miguel president Ramon
Ang told reporters earlier.
Meralco is the country’s biggest
electricity retailer with over 5.8 million customers in its franchise area. San
Miguel sold its stake in Meralco to JG Summit Holdings Inc. in 2013.
“So far we have agreement with
Meralco on Ilijan and Mariveles. So far, that’s it,” Ang said.
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.
South Premiere has an ongoing
dispute with PSALM over the Ilijan contract. The dispute arose from
interpretations of certain provisions related to generation payments under the
Ilijan IPPA agreement.
PSALM advised South Premiere on
Sept. 4, 2015 that it was terminating the Ilijan IPPA agreement because of the
latter’s alleged failure to settle the alleged outstanding generation payments.
PSALM was demanding payment of
unpaid obligations amounting to P6.6 billion from South Premiere.
The Mandaluyong City regional trial
court issued last year a preliminary injunction in favor of South Premiere,
stopping the government from further proceeding with the termination the IPPA
contract for the Ilijan natural gas power plant.
PSALM called on the performance bond
in the form of a stand-by letter of credit of South Premiere with ANZ Bank in
the amount of $50 million.
South Premiere filed a complaint
before the court on Sept. 7, 2015 to nullify the termination notice of PSALM
and the drawing of the standby letter of credit “for lack of factual and legal
basis.”
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