San Miguel’s Ang says PSALM was paid $4.8B as part of Ilijan contract
SAN Miguel Corp. (SMC) said it had paid through a subsidiary a total of $4.8 billion in various fees as of last month to Power Sector Assets and Liabilities Management Corp. (PSALM), contradicting claims made by the state agency that the listed conglomerate had been remiss in its obligations.
“This is clear proof that we religiously pay PSALM and honor our contractual obligation under the Ilijan Administration Agreement,” said Ramon S. Ang, president and chief operating officer of SMC, in a statement on Thursday.
The subsidiary is South Premiere Power Corp. ( SPCC), the administrator of the 1,200- megawatt Ilijan power plant.
“The records will show that we have paid more than enough, and we religiously abide by our contractual obligation as administrator of Ilijan,” Mr. Ang said.
He said PSALM is net cash positive from its contract with SPPC, having gained P30 billion as of August 2017.
“How can they claim we still have underpayments and that they are losing money under the IPPA (independent power producer administrators) agreement?” he said.
In the statement, SMC said by the time the administration agreement with PSALM expires in 2022, it would have paid the agency a total of P384 billion or about $7.68 billion for the 20-year-old power plant.
SPPC had earlier filed a case against PSALM, claiming the latter illegally terminated its IPPA and treated the SMC unit as an administrator in default.
It said PSALM’s “willful breach of contract” was the result of a flawed interpretation of certain provisions related to its power generation payments under the agreement.
It added that SPPC had been pushing for consistency in the handling of power industry issues. It cited conflicting views between PSALM and the Energy Regulatory Commission (ERC) on where the power generated should be sold.
SMC said PSALM wanted SPPC to sell its power output to the wholesale electricity spot market ( WESM) instead of distribution utility Manila Electric Co. (Meralco) to take advantage of the higher revenue with the higher spot market prices in November and December 2013.
During this two- month period, prices were at P15.56 per kilowatthour ( kWh), it said. Current rates range from P2 to P2.50 per kWh as supply exceeds demand, it added.
“PSALM’s assertion could have spelled huge losses for both the PSALM and the SPPC,” it said.
“But the ERC, in its decision citing public interest, pointed out WESM’s volatile prices as the reason to avoid WESM as it also gave weight to the availability of continuous and reliable supply of electricity to [Meralco] customers,” it added. —