San Miguel Corp. (SMC) said its offer to pay off capacity charges for its 1,200 megawatts (MW) Ilijan power plant two years ahead of schedule, was made as “a gesture of good faith.”
SMC through South Premiere Power Corp. (SPPC) has been the independent power producer administrator of the power plant in Batangas since 2010.
SMC said in a statement it is willing to continue discussions with the Power Sector Assets and Liabilities Management Corp. (PSALM) which rejected the offer of prepayment.
PSALM said the prepayment carried a new condition that “entirely differs from the tenor of SPPC’s original offer.”
But SMC said the prepayment was meant to help boost government resources to address the impact of the pandemic.
The Department of Finance (DOF) said SPPC publicly announced last year it was willing to prepay these monthly payments to PSALM “without prejudice” to the pending case it has with the latter.
Irene Besido-Garcia, PSALM president and chief executive officer, said SPPC’s latest offer contained in a letter dated Jan. 11, 2021 provides 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 provided in the IPPA agreement.
SMC said the resulting turnover of the power plant is “a natural consequence of prepaying the remaining P20- billion capacity charges which is now down to P14 billion as of Jan 31, 2021.”
The DOF said SPPC owed PSALM P23.07 billion in generation payments as of end-December 2020 and that the matter is subject of a pending court case.
Based on PSALM’s data, the monthly payments due from SPPC for the period of January 2021 until June 2022 is about P14 billion.
Garcia said PSALM in its response last Jan. 18, 2021 told SPPC its acceptance of the prepayment offer under the new condition that it will “cede control and ownership of the Ilijan Power Station to SPPC” will “pre-empt any ruling of the judicial court on the matter and will undoubtedly prejudice PSALM’s legal position.”