SMC mulls another legal action vs PSALM

SMC Global Power Holdings Corporation, the energy generating unit of San Miguel Corporation (SMC), is planning to file a case against the staterun Power Sector Assets and Liabilities Management Corporation (PSALM) for another dispute — this time concerning a separate power supply contract and a different power plant.

Last week, SMC was planning to sue PSALM for illegally terminating the company’s independent power producer administrator (IPPA) contract in the 1,200-megawatt Ilijan gas-fired power plant

Now, SMC president and chief operating officer Ramon S. Ang said the company is also mulling over a plan to pursue legal action against the same agency for another issue, which involves the Sual power station, a 1,294 megawatt (MW) coal-fired power station located in Pangasinan that SMC Global administers as an IPPA.

“Actually, we have another dispute with PSALM and this is about PSALM … Our contract with the government is to administer 1,000MW of power capacity in Sual, but they are asking us payments for 1,200MW,” Ang said.

“That’s illegal. We will sue PSALM for that. That’s fraud. The contract only involves 1,000MW but they made it 1,200 MW at the last minute,” he added.

Ang was referring to a memorandum of agreement (MOA) executed among PSALM, Team (Philippines) Energy Corporation, and Team Sual Corporation in 2009. The MOA allegedly imposed SMC to pay for some excess capacity for Sual plant.

SMC already sought PSALM to act upon this matter but the government agency has not yet given the company any response.

SMC Global Power began acting as IPPA of the Sual power plant in November, 2009.

The company sells power through off take agreements either directly to customers, including the Manila Electric Company and other distribution utilities, electric cooperatives and industrial customers, or through the Philippine Wholesale Electricity Spot Market.

Through its wholly-owned subsidiary South Premiere Power Corp. (SPPC), SMC Global also found itself in the middle of a growing dispute with PSALM that started when the latter terminated SPCC’s IPPA agreement due to alleged unpaid dues that cost more than 6 billion.

This resulted to SPPC’s move to seek legal action, which led to a court order stopping PSALM from terminating the IPPA agreement.

Ang said in an interview with reporters last Tuesday that PSALM’s termination of the contract is a form of ’harassment’ in a sense that the staterun agency is not following the terms in the agreement.

He clarified that upon the acquisition of its IPPA agreement for Ilijan, the payments that were made by SPCC to PSALM already amounted to 180 billion as of August, 2015.

This situation is quite different from the scenario rendered by PSALM where it made SPCC look like it totally fell short of its obligations to pay its dues for its IPPA contract.