PSALM rejects SMC unit’s loan prepay condition — DOF

Published February 24, 2021, 3:48 PM

by Chino S. Leyco

State-run Power Sector Assets and Liabilities Management Corp. (PSALM) has rejected the new condition offered by South Premiere Power Corp. (SPPC) in paying ahead its obligations for administering a power plant in Batangas.

In a statement released by the Department of Finance (DOF), it said the new condition recently imposed by SPPC, a wholly-owned subsidiary of SMC Global Power Corp., for the P22.68 billion accumulated monthly payments to PSALM until June 2022 has been thumbed down.

Quoting PSALM President and CEO Irene Besido Garcia, the DOF said that SPPC’s offer “unexpectedly contained the preposterous condition” that is “entirely differs from the tenor of SPPC’s original offer.” 

The DOF cited that SPPC had publicly announced last year that it was willing to prepay these Monthly Payments to PSALM “without prejudice” to the pending case it has with the power company.

 “Garcia explained that in the March 6, 2020 offer of SPPC to PSALM, the only condition imposed by SPPC on the advance settlement of its Monthly Payments to PSALM was that it would be without prejudice to SPPC’s legal position with respect to the ongoing dispute with PSALM on the Generation Payments,” the DOF said.

The San Miguel Corp.’s power unit, DOF said also made the same announcement during a March 2020 House Committees on public accounts and on good government and public accountability hearing.

But Garcia reported in a recent meeting with Finance Secretary Carlos G. Dominguez III that SPPC now asked 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.”

Quoting Garcia, DOF said the new condition of SPPC was neither indicated in its original offer letter dated March 6, 2020, nor mentioned during the July 2, 2020 meeting between representatives of the two companies.

If the new condition is accepted, Garcia told Dominguez that PSALM will “pre-empt any ruling of the judicial court on the matter and will undoubtedly prejudice PSALM’s legal position.” 

DOF said that PSALM’s response to SPPC’s new condition was sent to SPPC on January 18, 2020.

 “In the same response, PSALM reminded SPPC that in PSALM’s letter of August 4, 2020, it was categorically stated therein that ‘PSALM is willing to accept SPPC’s offer, provided that such acceptance is without prejudice to PSALM’s legal position’ in the pending case,” DOF said.