SMC says all debts to PSALM fully paid

(The Philippine Star) - February 22, 2020 - 12:00am

https://www.philstar.com/business/2020/02/22/1995018/smc-says-all-debts-psalm-fully-paid

MANILA, Philippines — San Miguel Corp. (SMC) said it has no unpaid debts with the Power Sector Assets and Liabilities Management (PSALM).

SMC said it already paid a total of P314.6 billion for its administration of the capacity from the 1,200-MW Ilijan power plant in Batangas as of last month.  The amount consisted of P73.9 billion in fixed monthly payments and P240.7 billion in generation charges.

The estimated remaining balance for payment to PSALM is P77.6 billion by the time the agreement expires in 2022. This consists of P23.6 billion in fixed monthly payments and P54 billion in generation charges.

According to SMC, its total paid and unpaid payments to PSALM will amount to P392.2 billion, or P97.5 billion in fixed monthly payments and P294.7 billion in generation charges.

With the payments made as of January, PSALM gained P40 billion from the deal.

“For some reason, while our case with PSALM is still in court, this issue is being raised by parties that are devious enough to use and misrepresent the Makabayan bloc to advance their ulterior motives,” SMC president Ramon Ang said in a statement.

The company issued the statement in response to stories that came out in tabloids in previous weeks, supposedly coming from PSALM and the Makabayan bloc, castigating the company for “unpaid debts” to government.

Bayan Muna, which is part of the Makabayan bloc, denied issuing any such statements.

The issue was also raised recently in a joint hearing in Congress.

SMC said this puts into question the motives of the true source of the news release and the integrity of the material.

“It’s for this reason that we are releasing the latest figures of our continuous and up-to-date payments to PSALM,” Ang said.  – Danessa Rivera

Due to differences in interpreting the basis for generation payments, SMC power unit South Premiere Power Corp. (SPPC) and PSALM began discussions in 2012 to come up with a proper computation.

However, On Sept. 4, 2015, PSALM unilaterally terminated SPPC’s administrator contract over Ilijan and called on its performance bond.

But then PSALM chairman Finance Secretary Cesar Purisima said the decision to terminate was not authorized by the PSALM board.

Ang said the dispute stemmed from a misinterpretation by PSALM of the provisions of SMC’s original independent power producer administration (IPPA) contract which led to a wrong basis for computation of their supposed “underpayment.”

Essentially, PSALM is computing generation payments due from SPPC based on prevailing wholesale electricity spot market (WESM) prices, particularly from November to December 2013, when there was a temporary spike in prices. 

SMC said such spike in WESM prices would eventually be declared null and void by the Energy Regulatory Commission (ERC). 

Moreover, SPPC said selling Ilijan Plant’s reliable baseload capacity to WESM would have put them in violation of provisions of their power supply contract approved by ERC, designed specifically to protect consumers from higher and fluctuating electricity prices in the WESM.