SAN MIGUEL Corp. (SMC) said that its offer to pay off the 1,200-megawatt (MW) Ilijan power plant’s capacity charges ahead of schedule was done in good faith, according to a statement issued on Thursday.
This comes a day after state-led Power Sector Assets and Liabilities Management Corp. (PSALM) rejected what it described as a “preposterous” settlement in the payment scheme put forward by SMC power unit South Premiere Power Corp. (SPPC).
The agency received the settlement offer from the firm a letter dated Jan. 11. Details of PSALM’s position were shared on Wednesday by the Department of Finance (DoF). The Finance secretary chairs PSALM.
“SMC’s offer to pay off capacity charges for its Ilijan Power Plant, two years ahead of schedule, was made as a gesture of good faith to help boost government resources needed to address the immediate social and economic impact of the COVID-19 (coronavirus disease 2019) pandemic,” SMC said in its statement.
It explained that the turnover of the Ilijan plant to SPPC was “a natural consequence of prepaying the remaining P20 billion worth of capacity charges.”
SMC said that the remaining capacity charges were down to P14 billion as of end-January, as its unit SPPC had paid a total of P83 billion in capacity charges and P260 billion in generation charges for the plant.
“If all the capacity charges are paid then the selling price of the Ilijan Power Plant would have been deemed paid. In fact, SPPC would have overpaid, as P98 billion would have paid for a brand new, and not a 25-year old, power plant,” SMC said.
The DoF said PSALM rejected SPPC’s offer on Jan. 11 because it contained a “preposterous condition” that was not previously mentioned in the payment scheme suggested in March last year.
According to the Finance department, PSALM President and CEO Irene Joy Besido-Garcia said SPPC’s latest offer contains a condition that calls for PSALM to “cede control and ownership of the Ilijan Power Plant to SPPC upon full settlement of the Monthly Payments, and ahead of the June 2022 date of turnover provided in the Independent Power Producer Administrator agreement.”
The DoF said that PSALM had sent a letter dated Jan. 18 to SPPC, saying that the acceptance of the firm’s prepayment offer under the new condition would “pre-empt any ruling of the judicial court on the matter and will undoubtedly prejudice PSALM’s legal position.”
The state-led entity added that the National Power Corp. and KEPCO Ilijan Corp. already agreed on the transfer date of the Ilijan plant.
“PSALM should not be obligated to fast-track or amend its current arrangements in the Energy Conversion Agreement (ECA) under another contract with a different party in order to accept SPPC’s offer,” the DoF said.
SMC, in its statement on Thursday, said that it is committed to pursue discussions with the government in swiftly resolving the issue. — Angelica Y. Yang