Phinma Energy to sue PSALM over deal termination

PHINMA ENERGY Corp. said its board has authorized the filing of a case against state- led Power Sector Assets and Liabilities Management Corp. (PSALM), as the listed company sought to block the termination of an administration agreement over a geothermal power plant in Leyte.

In a disclosure to the stock exchange, Phinma Energy said the filing of the case against PSALM was among the matters taken up by its board during a meeting on Monday.

PSALM handles the privatization of the generation assets of the National Power Corp. and the power transmission assets of the National Transmission Corp. as called for by Republic Act No. 9136 or the Electric Power Industry Reform Act of 2001 (EPIRA).

Phinma Energy is suing PSALM to prevent it from terminating the deal — on grounds of administrator’s default — for the selection and appointment of independent power producer administrators (IPPAs).

The plant under the agreement is the “strips of energy” of the Unified Leyte Geothermal Power Plants (ULGPP) located in Tongonan town, Leyte.

To recall on Nov. 7, 2013, Phinma Energy, then known as Trans-Asia Oil and Energy Development Corp., was declared one of the winning bidders with the right to administer 40 megawatts (MW) “strip of energy” from ULGP.

On Nov. 8, 2013, Typhoon Yolanda hit Region 8, or the Eastern Visayas, and resulted in extensive damage to the ULGP. It was only a year later that PSALM awarded the “strips” to the winning bidders.

Phinma Energy said it had formally sought the renegotiation of the agreement with PSALM, even proposing several measures for relief. The company had written PSALM to express the difficulties the administrators suffered under the agreement.

Through its counsel, Phinma Energy said it had written a letter exercising its right to withdraw from the agreement.

“Discussions on the termination were initiated,” it said.

The company, however, received a notice from PSALM of the administrator default, it said. The government agency also resolved to terminate the agreement and forfeit the performance bond.

Phinma Energy is engaged in power generation and trading, oil and mineral exploration, development and production.

On Monday, shares in Phinma Energy slipped by 0.55% to close at P1.81 each.