SMC Global puts IPO on hold amid PSALM dispute

By Victor V. Saulon, Sub-Editor

SMC GLOBAL POWER Holdings Corp. has put on hold its plan to go public this year, amid its on-going dispute with the Power Sector Assets and Liabilities Management Corp. (PSALM) over unpaid obligations related to its contract for the 1,200-megawatt (MW) Ilijan power plant.

“With this gulo sa Ilijan, paano ako maga-IPO? ’Yan ang nakakabitin (With the trouble at Ilijan, how can I do an initial public offering (IPO)? That is what’s causing the delay),” Ramon S. Ang, SMC president and chief operating officer, told reporters.

Mr. Ang was referring to the claims made by PSALM that San Miguel Corp.’s (SMC) energy generation arm has outstanding debts to the state agency relating to the administration agreement over the gas-fired power plant in Batangas City.

He said SMC Global’s South Premiere Power Corp. (SPPC), the entity that forged the deal with PSALM, had been paying faithfully whatever is due to the government entity tasked to privatize state power and transmission assets.

Mr. Ang also asked the agency to stop unnecessary publicity as this was turning off investors.

He was reacting to recent reports that the Department of Energy (DoE) asked SPPC, in which he is also president and chief executive officer, to honor its contractual obligation to the government as the administrator of the Ilijan plant.

Mr. Ang also said the expansion of SMC subsidiary Petron Corp. is hinged on the resolution of issues relating to its lease agreement with another government corporation Philippine National Oil Co. (PNOC).

“’Yan namang Petron, nagkakaproblema din ako sa expansion. Sino ngayon magpapautang sa akin ng pera? May threat pa na parang ipapa-cancel pa ang lease ko. Masama sa investor ’yan (For Petron, I also have a problem with its expansion. Who will lend me money? There is a threat that my lease might be canceled. That’s bad for investors),” he said.

Mr. Ang said Petron was planning to expand the size of the property it is leasing from PNOC to allow the expansion of its refinery in Limay, Bataan to 300,000 barrels per day.

Cost-wise, he noted the expansion in Limay would be beneficial for Petron, which owns and operates a petroleum refining complex in the Bataan town with a capacity of 180,000 barrels per day. The refinery has its own piers and two offshore berthing facilities. It also has a power plant that serves the needs of the refinery.

Mr. Ang said the refinery expansion would require an additional 100 hectares, of which some could come from PNOC and most from other properties held by private individuals.

PNOC previously said it was not negotiating with Petron unless it agrees to remove conditions that are “onerous, burdensome and disadvantageous to the government.”

The Energy department’s commercial arm was referring to a provision in the contract stating that should the parties fail to come to an agreement, the same terms and conditions will apply except the initial rental rate for the renewal period.

That rate is the rental rate at the time of expiration plus 2%, with the subsequent rental rate escalated by 2% per annum. The lease contract is set to expire in August 2018.