AWHOLLY owned subsidiary of SMC Global Power Holdings Corp. has successfully sought an extension of the 72-hour temporary restraining order (TRO) earlier issued by a local court against the Power Sector Assets and Liabilities Management (PSALM) Corp. Judge Esteban Tacla Jr. of the Mandaluyong Regional Trial Court (TRC) Branch 208, extended the TRO for 17 days more or until September 28.
The first TRO, which prevented PSALM from terminating its contract with South Premiere Power Corp. (SPPC), was issued last September 8. “After careful review of the arguments raised by the parties vis-á-vis the records of the instant case, the court finds it proper for the TRO to be extended for another 17 days if only to preserve the status quo and to afford the court opportunity to hear the merits of the controversy conditioned upon payment by the plaintiff of a bond in the amount of P1 million,” the judge said in his September 11 order.
The court also scheduled a hearing on the application for writ of preliminary injunction on September 23. The dispute between SPPC and PSALM stemmed from an alleged unpaid Generation Payments for the period December 26, 2012 to April 25, 2015, amounting to more than P6 billion, an allegation which SMC Global denied.
“SMC Global believes that PSALM’s act of termination of the Ilijan IPPA [Independent Power Producer Administrator] is illegal, the claimed amounts due are PSALM’s erroneous calculations and is totally against the letter and the spirit of the Epira [Electric Power Industry Reform Act ],” SMC Global said. The court, meanwhile, is determined to resolve the dispute between the two parties. “What matters most to the court’s appreciation is the dispute as to what is the correct computation. This is in essence is the core of the controversy.”
PSALM had informed SPPC last September 4 that it was terminating the contract for the IPPA in the 1,200-megawatt Ilijan Combined Cycle Power Plant because of SPPC’s failure to settle the alleged outstanding generation payments.
The state firm also called on the performance bond in the form of a standby letter of credit of SPPC with ANZ Bank in the amount of $50 million.
The state firm said last week that its decision to terminate the contract would have spared electricity consumers from paying more.
Again, SPPC disagreed. It even said that “electricity prices will escalate with the termination as PSALM plans to trade Ilijan output on the WESM [Wholesale Electricity Spot Market].” PSALM issued the Notice of Termination to SPPC to stop the government from incurring unnecessary losses as a result of the Ilijan IPPA’s nonpayment of its obligations, amounting to P6,460,973,606.46, which forms part of the privatization proceeds to be utilized to liquidate the financial obligations of National Power Corp. pursuant to the Epira.
For power consumers, PSALM President and CEO Lourdes S. Alzona said the collection of outstanding amount will translate in reduction of Napocor stranded debts that will be recovered through the universal charge.
“While PSALM, on different occasions, has demanded immediate payment by SPPC of its outstanding generation payments, SPPC refused and consistently refuses to settle all its contractual obligations to PSALM for the relevant period,” Alzona added.