Phinma asks court for TRO vs Psalm

PHINMA Energy Corp. has asked the Regional Trial Court in Makati to issue a temporary restraining order (TRO) against Power Sector Assets and Liabilities Management (PSALM) Corp. to stop it from terminating a power contract involving the sale of the output of a geothermal-power facility.

The listed power firm wants the court to stop the state firm 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 (ULGPP) in Tongonan, Leyte, on grounds of Administrator’s default.

“The grant of the prayer for a temporary restraining order 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,” Phinma said on Wednesday. A civil case for damages and annulment of the agreement with prayer for a writ of preliminary injunction/writ of preliminary mandatory injunction and TRO was filed on September 13.

It can be recalled that Phinma, then Trans-Asia Oil and Energy Development Corp., was declared as one of the winning bidders with the right to administer 40-megawatts (MW) “strips of energy” from the ULGPP.

On November 08, 2013, Supertyphoon Yolanda severely hit Region 8, which resulted in extensive damage to the ULGPP. It was only after a one-year delay that PSALM awarded the strips to the bidders.

In several letters to PSALM, Phinma Energy formally sought the renegotiation of the agreement and proposed several measures for relief.

Representatives of PSALM and Phinma Energy met on several occasions. Phinma Energy wrote PSALM expressing the difficulties suffered by the administrators under the agreement.

Phinma Energy 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. Consequently, Phinma Energy filed a case against PSALM and its former president Emmanuel Ledesma, Jr.

“In the event that the court rules in favor of Phinma Energy, the agreement may be invalidated and an award for damages may be made to the corporation. An adverse decision may open the company to possible financial claims by Psalm,” said Phinma Energy, who added the case has no material adverse effect on the operations of the company.

Psalm has yet to issue a comment.

In another matter, Phinma Energy is looking at constructing a 45-MW solar plant in Batangas.

It said in a separate filing that a Solar Energy Service Contract was entered into between Phinma and the DOE. The contract grants Phinma Energy the exclusive right to explore, develop and utilize the solar-energy resource in a 486-hectare area in the city of Lipa and municipality of Padre Garcia, Batangas. The term of the service contract is 25 years, extendable for another 25 years.