SMC urges gov’t to honor Ilijan power plant contract

MANILA, Philippines — San Miguel Corp. (SMC) is urging the government to respect the public bidding process and honor the contract for the 1,200-megawatt (MW) Ilijan combined-cycle power plant.

This as state-run Power Sector Assets and Liabilities Management Corp. (PSALM) continues to demand SMC to settle its alleged debts, an issue which is currently pending in court.

SMC said the government body is wielding its power indiscriminately to mask its own shortcomings.

“This is bullying. They cannot just dictate on what works best for them. We have to follow due process,” SMC president and COO Ramon Ang said.

He said PSALM cannot unilaterally decide on the issue after the power plant was auctioned.

Moreover, it should be left for the courts to decide on the case, Ang said. “We continuously honor our obligations. In return, we only ask that they respect the sanctity of our agreement,” he said.

This is in reaction to PSALM’s insistence on pursuing collection efforts against SMC over the Ilijan power plant, citing that they also need to service their own obligations.

SMC, through its South Luzon Premiere Power Corp. (SPPC), reiterated that it has already paid P289.1 billion or $6.19 billion, in various fees as of end-April for the 1,200-MW Ilijan power facility in Batangas, contrary to recent claims that it owes PSALM P19.75 billion in unpaid dues.

PSALM has also gained P34.75 billion from its administration agreement with SPPC.

Because of this, SMC chided PSALM for demanding that it settle its alleged debts on its 1,200-MW Ilijan power plant.

“We are just wondering what PSALM did with all the money they made out of our administration agreement on Ilijan since 2010? The public has a right to know, we all have a right to know how they are running things there,” Ang said.

“These are funds that government should have put to good use such as vital public services and social programs,” he said.

The company said the amount it paid for capacity fees alone, which is equivalent to about $2 billion, is enough to pay for the 20-year old power plant. A brand new plant with the same capacity could be built for so much less.

SMC, through its power subsidiary SPPC, filed a case against PSALM in 2015 after it terminated the 1,200-MW Ilijan IPPA due to differences in computation of generation charges.

SMC, however, recently won against the government after the Mandaluyong regional trial court denied PSALM’s motion for reconsideration saying it found no strong and compelling reason to reverse its earlier ruling.

Separately, the Supreme Court also decided in favor of SPPC when PSALM challenged the Court of Appeals’ decision to affirm the writ of preliminary injuction filed by SPPC with the Mandaluyong RTC.