A unit of conglomerate San Miguel Corp. (SMC) has paid the government a total of $4.8 billion in various fees as of October this year.
South Premiere Power Corp. (SPPC), as administrator of the 1,200-megawatt (MW) Ilijan power plant, has paid the amount to Power Sector Assets and Liabilities Management Corp. (Psalm), according to Ramon S. Ang, SMC president and chief operating officer. This is contrary to the state firm’s allegation that SMC does not pay its obligations, he added.
“This is clear proof that we religiously pay Psalm and honor our contractual obligation under the Ilijan Administration Agreement,” Ang said on Thursday.
SMC owns SPPC, the administrator of the 1,200-MW Ilijan natural-gas power plant in Batangas province.
“The records will show that we have paid more than enough and we religiously abide by our contractual obligation as administrator of Ilijan. Psalm is, in fact, net-cash positive from their contract with us having already gained P30 billion as of August 2017,” Ang added. “How can they claim we still have underpayments and that they are losing money under the Ippa [Independent Power Producer Administrator] agreement?”
By the time the administration agreement with Psalm expires in 2022, SMC would have paid Psalm a total of P384 billion, or about $7.68 billion for the 20-year-old power plant.
SMC’s SPPC earlier filed a case against Psalm after the latter illegally terminated its Ippa and treated it as an administrator in default.
SPPC said Psalm’s willful breach of contract was the result of a flawed interpretation of certain provisions related to its generation payments under the Ippa agreement.
Meanwhile, SPPC said it is pushing for consistency under which the power industry is being handled, citing conflicting views between the Psalm and the Energy Regulatory Commission (ERC) on where the power generation should be sold.
Psalm stated that SPPC should have sold its power generation to the Wholesale Electricity Spot Market (Wesm), instead of to the Manila Electric Co. (Meralco) to take advantage of increased revenues due to high Wesm prices during the months of November and December 2013. During this two-month period, the prices were at P15.56 per kilowatt-hour (kWh).
Presently, the rates are at only P2 per kWh to P2.50 per kWh due to excess supply over the demand. Psalm’s assertion could have spelled huge losses for both the Psalm and the SPPC.
But the ERC, in its decision citing public interest, pointed out Wesm’s volatile prices as reasons to avoid Wesm. The ERC also gave weight to the availability of continuous and reliable supply of electricity to Meralco’s customers.