SMC plans to convert Ilijan gas power plant

SMC Global Power Holdings Corp. is planning to convert the 1,200-megawatt (MW) Ilijan power plant to a peaking plant once its administration contract expires in 2022, its top official said.

SMC president and COO Ramon Ang said the power plant will be converted into a diesel power plant to serve the peaking requirements of the Luzon grid.

He said the plan will coincide with the impending depletion of the Malampaya deepwater gas-to-power project off Palawan, which supplies the gas requirements of the power plant.

The license for Service Contract (SC) 38 that allows the exploration of the Malampaya gas field in northwest Palawan will expire in 2024 but this can be applied for extension with the Department of Energy (DOE).

“We want to convert it to a peaking plant. So when there’s power shortage in the future, we can use it like the Malaya plant,” Ang said.

He was referring to the 650-megawatt (MW) Malaya Thermal Power Plant (TPP) in Rizal. It was designated as a must-run unit by the Department of Energy (DOE) to address supply deficiency when operating power plants in the grid suddenly become unavailable.

SMC bagged the Ilijan independent power producer administration (IPPA) contract in April 2010 after it outbid other parties with a $870 million offer. SMC Global’s subsidiary, South Premiere Power Corp. (SPPC), was then issued the certificate of effectivity as the Ilijan plant’s IPPA.

The Ilijan plant will be turned over to SMC once its IPPA contract expires in 2022.

Currently, SMC is currently embroiled in a dispute with state-run Power Sector Assets and Liabilities Management Corp. (PSALM) over the Ilijan plant.

Earlier, SPPC filed a case against PSALM after the latter illegally terminated its IPPA in 2015, treating it as an administrator in default.

Supporting PSALM, Energy Secretary Alfonso Cusi had said SMC should settle its unpaid obligations since it has entered into a contract with government for the IPPA of the Ilijan plant.

But 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.

As of end-October, SMC said it has paid $4.8 million— roughly equivalent to P245 million—in various fees to PSALM, as part of its contractual obligations under the IPPA contract.