Disadvantage to government
Based on PSALM’s billings, SPPC had accumulated overdue payables amounting to P34.04 billion as of 30 June 2022 when it took over the ownership of Ilijan.
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Daily TribuneBased on PSALM’s billings, SPPC had accumulated overdue payables amounting to P34.04 billion as of 30 June 2022 when it took over the ownership of Ilijan.
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Had it not been for the Mandaluyong Regional Trial Court where San Miguel Corp. had a high batting average in winning favorable rulings, the Ilijan natural gas plant would still be in the hands of the government.
Last June, the high-capacity Ilijan gas plant was surrendered to the conglomerate's energy unit SMC Global Power based on the terms of the independent power producer administrator deal with the state-holding firm Power Sector Assets and Liabilities Management.
In September 2015, however, PSALM sought to terminate the IPPA due to the debts of South Premiere Power Corp. the subsidiary of SMC Global Power running the Ilijan plant.
A dispute over the formula for computing the IPPA compensation resulted in collectibles of PSALM that now reached P34.4 billion and was the subject of a government decision to terminate the deal with the SMC Global Power unit.
The Mandaluyong RTC has ruled in favor of SPPC, preventing the state-run PSALM from terminating the IPPA.
The government thus had to keep track of SPPC's actions as the owner of the Ilijan power plant. Ownership of the Ilijan plant was questionably transferred to SMC Global Power from state firm National Power Corp. despite an ongoing court dispute.
For instance, PSALM sought the Energy Regulatory Commission's decision on SMC Global Power's petition for a rate increase to apply to it if it is granted.
The dispute between SMC Global Power and the government involves the method of computing the generation charge collections which the SMC energy unit insisted should be based on the fixed rate provided in its power supply agreement with Meralco.
Provided in the IPPA, however, is that SPPC should base the generation charge computation on the average prices in the Wholesale Electricity Spot Market.
Based on PSALM's billings, SPPC had accumulated overdue payables amounting to P34.04 billion as of 30 June 2022 when it took over the ownership of Ilijan.
PSALM had protested the SPPC's claim on the use of the PSA to arrive at the amount paid by the government since it is not a party to the PSA.
The transfer of Ilijan's ownership from PSALM to SPPC in June 2022 was also done in compliance with a Writ of Injunction from the Mandaluyong RTC.
Despite the almost seven years that had elapsed since the dispute started, the case remains in the pre-trial stage.
PSALM tried to turn the tables on SMC, saying if it insisted that the computation be based on the PSA terms, then any adjustment would have to be applied to its collectibles that will consequently rise.
Had the ERC given in to SMC's petition, electricity users will have to shoulder multiple increases in monthly bills.
Discounting the PSALM plea, other holders of straight pricing contracts with Meralco said they will also seek rate increases saying that the relief should apply to all.
In the Ilijan plant contract and its eventual transfer to SMC's ownership, the government's interest seems to have been thrown out of the window through an injunction order.
Former President Rodrigo Duterte, a former prosecutor, had a beef with courts about issuing temporary restraining orders, particularly those that last for years.
He said "pera-pera lang yan".
