San Miguel Corporation (SMC) said that it wishes to continue talks with the government even after its new condition regarding the advanced full settlement of its monthly payments for the 1,200-megawatt Ilijan Combined-Cycle Power Plant was rejected.
SMC said its offer to pay off Capacity Charges to the Power Sector Assets and Liabilities Management Corporation (PSALM) for the 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 impacts of the COVID-19 pandemic.
Capacity charges are capital payments by SMC as the plant’s administrator to PSALM, spread over the term of its contract.
SMC previously gave PSALM a condition, saying that ownership of the Ilijan plant should be turned over to conglomerate with the settlement of its dues. The government-owned firm then called the condition as “preposterous.”
The conglomerate pointed out that the resulting turnover of the power plant to its power arm South Premiere Power Corp. (SPPC) is a natural consequence of prepaying the remaining Php20 billion Capacity Charges, which have been reduced to Php14 billion as of January 31.
PSALM says SPPC still owes it Php23.1 billion in generation payments as of end-2020.
The computation of SPPC’s Generation Payments to PSALM is the subject of a pending court case.
Generation Payments refer to the cost of energy based on the specific formula provided for in the Independent Power Producer Administrator (IPPA) agreement. Meanwhile, Monthly Payments refer to the fixed monthly amounts SPPC owes PSALM based on the IPPA’s financial bid for its right to own the power plant at the end of the agreement.
As of January 31, SPPC said it had already paid approximately Php83 billion in capacity charges and Php260 billion in generation charges since the start of the IPPA.
San Miguel pointed out that if all the capacity charges are paid, then the Ilijan plant’s selling price plant would have been deemed fully paid. The diversified firm even reiterated that SPPC would have overpaid, as Php98 billion would have paid for a brand new, and not a 25-year-old, power plant.
The Ilijan power plant in Batangas City was built by KEPCO Ilijan Corporation under the energy conversion agreement (ECA) with the National Power Corporation and PSALM. SPPC was appointed as the plant’s IPPA in 2010.