PSALM says SMC still owes P24 billion

MANILA, Philippines — San Miguel Corp. still owes the government P23.94 billion even as the diversified conglomerate insists it has no unpaid debts.

In a statement, the Power Sector Assets and Liabilities Management Corp. (PSALM) refuted the claim of SMC’s South Premiere Power Corp. (SPPC) that it has no payables due to PSALM considering it already remitted P314.6 billion.

PSALM’s billings to SPPC, including the unpaid P23.94 billion, are based on the bid that SMC itself submitted to PSALM in April 2010 during the public bidding conducted for the  Ilijan Independent Power Producer Administration Agreement (IPPAA).

The terms of the IPPA agreement were fully disclosed to all bidders including SPPC long before said public bidding.

While SPPC’s payments to PSALM have now reached P314.6 billion, PSALM said it is still deficient when payables are computed based on the bid submitted by SMC  and on the IPPAA formula for computing payables.

As of December last year, SMC was still short by P23.94 billion, PSALM said.

“It is not fair for SPPC to complain that it has already paid too much to PSALM, or that it needs to pay even more, because these payments are all based on SPPC’s own bid, a business judgement of SPPC that it must honor regardless of any change in circumstances or any impact in its profit margin,” PSALM president and CEO Irene Besido-Garcia said.

SMC said it had paid a total of P314.6 billion, consisting of P73.9 billion in fixed monthly payments and P240.7 billion in generation charges. The estimated remaining balance for payment to PSALM is at P77.6 billion by the time the agreement expires in 2022. This consists of P23.6 billion in fixed monthly payments and P54 billion in generation charges. 

According to SMC, its total paid and unpaid payments to PSALM will amount to P392.2 billion or P97.5 billion in fixed monthly payments and P294.7 billion in generation charges. 

With the payments made as of January, PSALM had already gained P40 billion from the deal.

In 2010, San Miguel took on a “bid-to-win” attitude to clinch the public bidding and become Ilijan’s IPPA. This strategy of San Miguel resulted in financial consequences that the terms of the 2010 public bidding could bot be changed.

But due to differences in interpreting the basis for generation payments, SPPC and PSALM began discussions in 2012 to come up with a proper computation.

However, on Sept. 4, 2015, PSALM unilaterally terminated SPPC’s administrator contract over Ilijan and called on its performance bond. 

But then PSALM chairman Finance Secretary Cesar Purisima said the decision to terminate was not authorized by the PSALM board. 

 PSALM, however, clarified that the  termination of the IPPAA, which happened in 2015, was extensively reviewed and upheld by its current board composed of

appointees of President Duterte led by Finance Secretary Carlos Dominguez and Energy Secretary Alfonso Cusi.

The PSALM board was directed to collect SPPC’s P23.94 billion arrears.