Power Sector Assets and Liabilities Management Corp. is asking for a payment of P12.3 billion from a unit of San Miguel Corp. that administers the output of the 1,200-megawatt Ilijan natural gas power plant in Batangas province, government sources said Tuesday.
Sources said the total obligations of South Premiere Power Corp., the independent power producer administrator of Ilijan plant, reached P12.3 billion from June 2010 to April 2016. The total included P4.6 billion in disputed claims and P7.8 billion in undisputed claims.
“The undisputed amount starting December 2012 is now P7.8 billion, from P6 billion as per the demand letter in the case,” the source said.
The amount covers the accumulated shortfall in South Premiere’s payment of monthly obligations.
South Premiere has an ongoing dispute with PSALM over the Ilijan contract. The dispute arose from interpretations of certain provisions related to generation payments under the Ilijan IPPA agreement.
PSALM advised South Premiere on Sept. 4, 2015 that it was terminating the Ilijan IPPA agreement because of the latter’s alleged failure to settle the outstanding generation payments.
PSALM sent letters to South Premiere as early as Sept. 10, 2013 and Oct. 20, 2014 demanding the company to immediately settle unpaid obligations. These were not settled and remained uncontested by South Premiere.
The power privatization arm of the government earlier said it had strictly followed the computations based on the IPPA agreement and that its rightful claims were valid and not erroneous.
PSALM said South Premiere’s own computation of payments was “erroneous, as SPPC unilaterally and erroneously applied prices which were inconsistent” with the Ilijan IPPA agreement.
PSALM said its collectibles from South Premiere were a part of the privatization proceeds needed to liquidate the financial obligations of National Power Corp., pursuant to the Electric Power Industry Reform Act.
San Miguel announced plans to sell a 49-percent stake in South Premiere to Manila Electric Co. but this would likely require government approval.
“On the part of the government, we maintain that any disposition made by SMC will be subject to the claims of PSALM unless otherwise adjudged by the ours,” Energy Secretary Alfonso Cusi said.
A source said that even if there was no pending case involving the Ilijan contracts, “the clearance of PSALM is necessary for any planned transfer/assignment of contract.”
The source said the planned sale of the Ilijan corporate vehicle would involve a change in ownership and therefore needed PSALM approval.
PSALM manages the assets and liabilities of National Power Corp.
The Ilijan natural gas plant is one of the three natural gas power plants in Batangas province. It is operated by Kepco Philippines for the government, but its contract is managed by South Premiere under an IPPA agreement with PSALM.
South Premiere won the contract as the IPP administrator of the Ilijan plant during a bidding conducted by PSALM in 2010 with an offer of $870 million.
