PSALM REJECTS SMC UNIT’S OFFER FOR 1,200-MW BATANGAS POWER PLANT

State-run Power Sector Assets and Liabilities Management Corp. (PSALM) has thumbed down the proposed conditions of a San Miguel Corp. (SMC) unit to fully take over a power plant once it has settled its dues.

In a statement on Wednesday, the Department of Finance said PSALM president and chief executive Irene Besido-Garcia had theyrejected South Premiere Power Corp.’s (SPPC) new offer as it “entirely differs from the tenor of [its] original offer” to pay obligations for the 1,200-megawatt Ilijan power plant in Batangas City.

Last month, SPPC offered to advance in full its monthly payments up to June 2022—the turnover date under the independent power producer administrator (IPPA) agreement it entered into with PSALM in 2010.

“SPPC’s latest offer, which was outlined in a letter dated Jan. 11, 2021, and sent by the firm’s general manager Elenita Go, unexpectedly contained the preposterous condition that PSALM should cede control and ownership of the Ilijan power plant to SPPC upon full settlement of the monthly payments ahead of the June 2022 date of turnover provided in the IPPA agreement,” Garcia told Finance Secretary Carlos Dominguez III, who chairs PSALM.

“This new condition of SPPC was neither indicated in SPPC’s original offer letter to PSALM dated March 6, 2020, nor mentioned during the July 2, 2020 meeting between representatives of SPPC and PSALM,” Garcia said.

Last year, SPPC reportedly said it would prepay its monthly dues to Psalm “without prejudice” to the latter’s legal position amid their dispute regarding generation payments under the IPPA agreement.

“The computation of generation payments due PSALM from SPPC is the subject of the pending court case,” the DOF noted.

For his part, Dominguez told Garcia that as ordered by President Duterte, Psalm must “not to allow any private company to benefit or to secure a franchise until they settle their full accounts with the government.”

Citing Psalm’s books, Garcia said SPPC supposedly still had P23.1 billion in unpaid generation payments as of end-2020.

“Generation payments refer to the cost of energy based on the specific formula provided for in the IPPA agreement, while monthly payments refer to the fixed monthly amounts due to PSALM based on the IPPA’s financial bid for its right to own the power plant at the end of the IPPA agreement,” the DOF explained.