SMC power subsidiary paid P289b to PSALM

posted May 19, 2019 at 07:50 pm
by  Alena Mae S. Flores
South Premiere Power Corp., a wholly-owned subsidiary of SMC Global Power Corp., said it paid P289.1 billion or $6.19 billion to the government as of end-April 2019 for the administration of the 1,200-megawatt Ilijan power facility in Batangas province.

SPPC made the statement to debunk recent claims it owed state-run Power Sector Assets and Liabilities Management Corp. P19.75 billion in unpaid dues.

SPPC said it continued to honor and religiously pay its contractual obligations to PSALM under the Ilijan independent power producer administration 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,” said SPPC president Ramon Ang.

SPPC has a pending case against PSALM for breach of contract allegedly stemming from a flawed interpretation of certain provisions related to the generation payments under the Ilijan IPPA agreement.

The case filed by SPPC also sought to stop PSALM from illegally terminating SPPC’s Ilijan IPPA and treating the latter as an administrator in default.

The court on Sept. 15, 2016 issued an order granting a preliminary injunction that stopped PSALM from proceeding with the termination of the Ilijan IPPA agreement with SPPC while the main case was pending.

The company said PSALM’s questionable interpretation resulted in an alleged shortfall in generation payments.

SPPC said that of the P289.1 billion it paid to PSALM, P222.4 billion represented energy fees and P66.66 billion was for capacity fees. 

The company said that by the time the agreement expired by 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, equivalent to about $2 billion, was already enough to pay for the 20-year old power plant. A brand-new plant with the same capacity could be built for much less, it said.

SPPC said it also reimbursed PSALM regularly for fuel and variable operating and maintenance costs in the form of energy fees.

“Given these, SPPC is paying PSALM more than what it is paying the IPP counterparty for the Ilijan power plant. PSALM is in fact net cash positive from its administration agreement with SPPC,” the company.

SPPC said that as of end April, PSALM already gained P34.75 billion from its administration agreement with SPPC. Alena Mae S. Flores

SPPC said that on PSALM’s claims that the company should have sold its power generation to the Wholesale Electricity Spot Market instead of Manila Electric Co., this view was “very short-sighted.” 

SPPC said prices in November to  December 2013 at P15.56 per kilowatt-hour was a “fluke” and was in fact declared by ERC null and void in its order of March 2014.

It said WESM prices were volatile and were dependent on the supply and demand situation. 

“Today where supply exceeds demand, prices hover at about P2 to P2.50 per kWh which could have meant huge losses to PSALM and SPPC. It is not even enough to pay for fuel costs,” it said.

Topics: South Premiere Power Corp. , SMC Global Power Corp. , Power Sector Assets and Liabilities Management Corp. , PSALM , Ilijan power facility , Batangas province
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