DOE hastens power supply competitive biddings

Danessa Rivera (The Philippine Star) - May 20, 2019 - 12:00am 

https://www.philstar.com/business/2019/05/20/1919198/smc-has-already-paid-over-6-b-psalm

 

MANILA, Philippines — The San Miguel Group has paid over $6 billion as of end-April under its contractual obligations with state-run Power Sector Assets and Liabilities Management Corp. (PSALM) for the output administration of the 1,200-megawatt (MW) Ilijan power plant.
SMC Global Power Corp., through subsidiary South Premiere Power Corp. (SPPC), said it has settled P289.1 billion, or $6.19 billion, in various fees as of end-April for the 1,200-MW Ilijan power facility in Batangas.
This is contrary to recent claims that it owes PSALM P19.75 billion in unpaid dues.
SPPC maintains it honors and religiously pays its contractual obligations to PSALM under the Ilijan independent power producer administration (IPPA) agreement.
“It is unfortunate that PSALM has to resort again to misinformation, while the case is pending in court. While it is inappropriate for us to comment on the issue, we take this matter seriously and we cannot allow damaging statements like this to hurt our reputation and our stakeholders,” SPPC president Ramon Ang said in a statement.

The power company earlier filed a complaint against PSALM for willful breach of contract due to a flawed interpretation of certain provisions related to its generation payments under the Ilijan IPPA agreement. PSALM’s questionable interpretation resulted in alleged shortfall in generation payments by SPPC.
Based on SPPC’s records, the amount paid consists of P222.4 billion in energy fees and P66.66 billion in capacity fees.
By the time the agreement expires in 2022, SPPC would have paid PSALM a total of P390.6 billion, representing P293.01 billion in energy fees and P97.60 billion in capacity fees.

SPPC said the amount it paid for capacity fees alone, which is equivalent to about $2 billion, is already enough to pay for the 20-year old power plant. A brand new plant with the same capacity could be built for so much less.
The company said it also reimburses PSALM regularly for fuel and variable operating and maintenance costs (VOM) in the form of energy fees.
Given these, SPPC is paying PSALM more than what it is paying the IPP counter-party for the Ilijan power plant. PSALM is in fact net cash positive from its Administration Agreement with SPPC.
As of end-April, PSALM has already gained P34.75 billion from its administration agreement with SPPC.
This also belies PSALMS’ claims that SPPC does not honor its obligations under the Ilijan administration agreement.
SMC bagged the Ilijan IPPA in April 2010 after it outbid other parties with a $870 million offer. SPPC was then issued the certificate of effectivity as the Ilijan plant’s IPPA.
But in 2015, PSALM terminated the Ilijan IPPA for alleged non-payment of generation charges that it computed using WESM rates instead of the approved rates by the Energy Regulatory Commission (ERC). The state-run firm also claimed that SPPC has unpaid obligations.
SPPC eventually filed a complaint against PSALM due to willful breach of contract, resulting in flawed interpretation of certain provisions related to its generation payments, under the administration agreement.
Ang earlier urged PSALM to honor the IPPA contract and follow the rule of law “because it’s turning off investors.”