Phinma Energy Corp. formally filed a complaint and sought a temporary restraining order against Power Sector Assets and Liabilities Management Corp. with the Makati City Regional Trial Court for terminating their agreement and forfeiting on the company’s performance bond.
The company disclosed on Wednesday it filed the complaint against PSALM and its former fresident Emmanuel Ledesma Jr.
“Phinma Energy seeks to restrain PSALM from terminating the administration agreement for the selection and appointment of independent power producer administrators for the strips of energy of the Unified Leyte Geothermal Power Plants located in Tongonan, Leyte on grounds of administrator’s default,” it said.
The move followed the recent decision of the Phinma Energy board after the state agency moved to terminate the agreement and forfeit on the company’s performance bond because of alleged default.
Phinma Energy said the case had no material adverse effect on the operations of the corporation.
“The grant of the prayer for a TRO will restrain PSALM from terminating the agreement on the ground of administrator’s default and prevent PSALM from asserting any further claim to the detriment of the corporation,” it said.
Phinma Energy said in the event the court ruled against it, the agreement might be invalidated.
“An adverse decision may open the company to possible financial claims by PSALM,” it said.
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. Thus the filing of the complaint,” 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 were auctioned and 40 MW retained by PSALM as security asset.