SMC Global Power gets Ilijan plant

Danessa Rivera - The Philippine Star

MANILA, Philippines — The government has turned over the 1,200-megawatt (MW) Ilijan power plant in Batangas to SMC Global Power Holdings Corp. after more than two decades under an administration agreement.

In a disclosure to the Philippine Dealing and Exchange Corp. (PDEx) yesterday, SMC Global said the power plant was turned over by the Power Sector Assets and Liabilities Management Corp. (PSALM) to wholly owned subsidiary South Premiere Power Corp. (SPPC) after a deed of sale was executed last June 3.

SPPC was appointed the independent power producer (IPP) administrator for the Ilijan power plant under an administration agreement signed on June 26, 2010.

In a text message to The STAR, PSALM president and CEO Irene Besido-Garcia said the Ilijan plant was turned over to SPPC on June 5 despite a case pending in the Mandaluyong Regional Trial Court (RTC) since 2015.

She said PSALM had to respect and follow the provisions of the IPP administration agreement (IPPAA) in compliance with the writ of preliminary injunction issued by the Mandaluyong RTC in September 2015.

“No choice. Thus, pursuant to the terms of the said IPPAA, PSALM was constrained to turn over the Ilijan power plant to SPPC on June 5, 2022 without prejudice to PSALM’s legal positions in, and the eventual outcome of, civil case MC15-9629.  This civil case is still pending in RTC Mandaluyong,” Besido-Garcia said.

“SPPC is well aware that the turnover of the Ilijan power plant was made without prejudice to civil case MC15-9629,” she said.

The PSALM official said the state-run agency would continue to “pursue its legal positions in the said case and maintain its computation of the generation payments that should be paid by SPPC to PSALM.”

In 2020, SMC made an offer to pay off capacity charges for the Ilijan power plant two years ahead of schedule to help boost government resources needed to address the immediate social and economic impact of the COVID-19 pandemic.

The advanced payment will cover the capacity charges—which represent capital payment by SPPC to PSALM as administrator of the Ilijan plant, spread over the term of its contract—amounting to P22.68 billion.

The offer is separate from the alleged “overdue receivables” amounting to P23.9 billion, which stemmed from differences in computing generation charges and is the subject of a court case pending since 2015.

PSALM had calculated generation charges based on the wholesome electricity spot market (WESM) prices to maximize its earnings from the IPP administrator (IPPA), while SPPC used a fixed rate approved by the Energy Regulatory Commission.
 The government, through PSALM, rejected the advanced payment and the “preposterous condition” that the state-run firm should cede control and ownership of the Ilijan power plant to SPPC once the monthly payments are settled and ahead of the turnover date.

As of end-2020, government data showed SPPC still owes PSALM P23.07 billion in generation payments.

Generation payments refer to the cost of energy based on the specific formula provided for in the IPPA agreement, while monthly payments refer to the fixed monthly amounts due to PSALM based on the IPPA’s financial bid for its right to own the power plant at the end of the IPPA agreement.


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