Phinma prepares legal suit vs PSALM
Phinma Energy Corp. will sue Power Sector Assets and Liabilities Management Corp. for terminating an agreement that earlier named Phinma Energy as the independent power producer administrator for the strips of energy generated by the Unified Leyte Geothermal Power Plants in Tongonan, Leyte province.
Phinma Energy disclosed to the Philippine Stock Exchange Monday that its board “authorized the filing of the case against PSALM” after the state agency moved to terminate the agreement and forfeit on the company’s performance bond because of alleged default.
Phinma Energy, formerly Trans-Asia Oil and Energy Development Corp., was declared one of the winning bidders for the right to administer 40 megawatts “strips of energy” from the Unified Leyte power plants on November 7, 2013.
Shortly after winning the bid, however, super typhoon Yolanda struck Region 8 on November 8, 2013, resulting in extensive damage to the ULGPP.
Phinma Energy cited that PSALM awarded the strips to the winning bidders after a one-year delay.
PSALM issued the notice of award to Phinma Energy as the IPPA for the 40 MW worth of strips of energy of the Unified Leyte plants in January 29, 2014.
“In several letters to PSALM, Phinma Energy formally sought the renegotiation of the agreement and proposed several measures for relief,” the company said.
It said representatives of PSALM and Phinma Energy met on several occasions, with the power firm expressing the difficulties suffered by the administrators under the agreement.
“Phinma Energy, through counsel, wrote a letter exercising its right to withdraw from the agreement. Discussions on the termination were initiated. However, Phinma Energy received a notice from PSALM of the administrator default and PSALM has resolved to terminate the agreement and forfeit the performance bond,” it said.
The Unified Leyte geothermal plants are composed of Malitbog, Mahanahdong and Uppoer Mahiao geothermal plants. The plants were built by National Power Corp. and operated by Energy Development Corp. through a power purchase agreement.
PSALM, pursuant to the Electric Power Industry Reform Act of 2001 or EPIRA, issued the invitation to bids for the strips of energy of the Unified Leyte plants in 2001.
Strips of energy meant one megawatt of the Unified Leyte’s output. The strips total 240 MW, of which 200 MW auctioned and 40 MW retained by PSALM as security asset.
Phinma Energy, along with six other IPPAs, were awarded strips of energy with associated 40 MW of capacity at a bid price of P4.6629 per kilowatt-hour.
Phinma Energy posted a net income of P298 million in the first six months of 2017, down 45 percent from P542 million year-on-year on lower electricity prices.