MANILA, Philippines – The San Miguel Group’s total unpaid obligations to the Power Sector Assets and Liabilities Management Corp. (PSALM) for the generated capacity of the 1,200-megawatt (MW) Ilijan power plant in Batangas has ballooned to over P12 billion, according to a government source.
The amount is the accumulated shortfalls in generation payments from June 2010 to April 2016, which includes undisputed obligations, the source said.
Meanwhile, the San Miguel Group’s outstanding generation payment covered by PSALM’s demand letter now amounts to P7.8 billion.
In Sept. 4, 2015, PSALM terminated the independent power producer agreement (IPPA) for the Ilijan plant with South Premiere Power Corp. (SPPC) for failure to pay the outstanding generation payments from Dec. 26, 2012 to April 25, 2015 amounting to P6.46 billion.
SPPC is a subsidiary of SMC Global Power Holdings Corp., the power unit of the San Miguel Group.
Following the termination of contract, SMC Global chairman Ramon Ang sued PSALM for “intentional breach of contract.”
Ang said SPPC had already paid P180 billion in obligations to PSALM for the Ilijan IPPA, broken down into P36 billion in capacity fee and P144 billion
in generation payments, as of September 2015.
SMC Global, through SPPC, then asked the Mandaluyong Regional Trial Court (RTC) Branch 208 to prevent PSALM from terminating the contract, where after the local court issued a preliminary injunction in favor of the power company after the TRO lapsed.
Recently, San Miguel Corp. and Manila Electric Co. (Meralco) have confirmed they are in talks for a possible partnership for the Ilijan power plant, which is the asset involved in the case still lodged at the Mandaluyong City RTC.
“We offered to sell 49 percent of Ilijan power plant to Meralco and we are in talks but we can only close the deal once the court case which we have filed against PSALM has been resolved,” Ang said last week.
Meralco president Oscar Reyes said the company is in “very early discussions” with the San Miguel Group for a possible 49 percent investment in the power plant through SPPC.
However, the deal depends on the resolution of the case filed against PSALM. Energy Secretary Cusi also said SMC would need the approval of government to be able to sell part of its interest in the Ilijan plant.
SMC bagged the Ilijan IPPA in April 2010 after it outbid other parties with a $870 million offer. SPPC was then issued the certificate of effectivity as the Ilijan plant’s IPPA after all conditions precedent had been met.