Diversified conglomerate San Miguel Corporation (SMC) is inclined to resolve at the negotiating table the P23.94 billion billing dispute of its subsidiary South Premiere Power Corporation (SPPC) with state-run Power Sector Assets and Liabilities Management Corporation (PSALM) for the 1,200-megawatt Ilijan gas-fired power facility in Batangas.
That was after SPPC’s offered payment had been rejected, primarily by the Department of Finance (DOF); and that was based on the imprimatur of Secretary Carlos Dominguez III, who also sits as PSALM Board Chairman.
In a statement to the media, SMC said it is “committed to continue discussions with the government to swiftly resolve the issue and help boost the country’s economic recovery in these trying times.”
PSALM indicated the deal-breaker had been the condition set forth by SPPC, that the government-owned firm shall “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 IPPA (Independent Power Producer Administrator) agreement.”
SMC nevertheless stipulated that the offer “to pay off capacity charges for its 1,200MW 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 pandemic.”
In SPPC’s view, its offer of P20 billion advance payment for capacity charges as lodged with PSALM last year, shall warrant the turnover of the facility under its charge.
The San Miguel firm further noted “since the start of the IPPA, SPPC already paid approximately P260 billion in generation charges as of January 31, 2021.”
It specified that the offered advance capacity payments of P20 billion were even bigger – because if that will be reckoned at present time, that will already go down to P14 billion.
San Miguel opined that “if all the capacity charges are paid, then the selling price of the Ilijan power plant would have been deemed paid.”
It further stressed “in fact, SPPC would have overpaid, as P98 billion would have paid for a brand new, and not a 25-year old power plant.”