Business

SMC unit payments hit ?314.6 B

SMC unit payments hit ?314.6 B

By MYRNA M. VELASCO

The subsidiary of San Miguel Corporation (SMC) has already paid ?314.6 billion for the capacity that it has been trading for the 1,200-megawatt Ilijan gas-fired power plant – as anchored on the independent power producer administrator (IPPA) deal that has been sealed with state-run firm Power Sector Assets and Liabilities Management Corporation.

SMC-owned firm South Premiere Power Corporation (SPPC) said such scale of payments it already remitted to PSALM had been as of January 2020 this year –and for last month alone, PSALM fetched ?40 billion from the Ilijan IPPA deal.

SMC President Ramon S. Ang debunked claims that SPPC has “unpaid debts” relating to the Ilijan IPPA contract, with him stressing “it’s for this reason that we are releasing the latest figures of our continuous and up-to-date payments to PSALM.”

The SMC chief executive said the issues being resurrected by some parties “are devious enough to use and misrepresent the Makabayan bloc to advance their ulterior motives.”

Ang reiterated that the “figures under dispute” had been due to “differences in interpreting the basis for generation payments” – thus, there had been previous discussions on that with PSALM; and cases were also filed eventually.

SPPC and PSALM first sat down in 2012 “to come up with a proper computation,” SMC chronicled, but in September 2015, there was unilateral move on the part of the state-run company to terminate the contract and to seize its performance bond, hence, the filing of cases ensued.

The company similarly cited the statement of former Finance Secretary Cesar Purisima that “the decision to terminate was not authorized by the PSALM Board.”

Of the ?314.6 billion total worth of payments to PSALM, SPPC indicated that fixed monthly payments hovered at ?73.9 billion; and ?240.7 billion in generation charges.

Until the end of the build-operate-transfer (BOT) contract for the Ilijan plant in 2022 which also sets the culmination of the IPPA deal and the eventual turnover of the facility to SPPC, the remaining payments to PSALM would be as much as ?77.6 billion – comprising of ?23.6 billion in fixed monthly payments and ?54 billion in generation charges.

“All in all, total paid and unpaid payments to PSALM will amount to ?392.2 billion, or ?97.5 billion in fixed monthly payments and ?294.7 billion in generation charges,” the company said.

Ang reiterated “the dispute stemmed from a misinterpretation by PSALM of the provisions of SMC’s original IPPA contract,” that purportedly led to a wrong basis for computation of the alleged underpayments.

The company emphasized “PSALM is computing generation payments due from SPPC based on prevailing Wholesale Electricity Spot Market (WESM) prices, particularly from November to December 2013, when there was a temporary spike in prices.”

That was the episode of the so-called “perfect storm” in the restructured electricity sector, when there had been extreme spikes in prices due to tight supply conditions in the grid.

Ang stressed “we cannot just change the provisions of the contract for those two months, when there was an extraordinary spike in prices, and then revert to the original agreement after that,” with him asserting further that “if we did that, PSALM would actually lose a lot more.”

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