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San Miguel sues PSALM over P17.3-B ‘plunder’

By: - Reporter / @JeromeAningINQ
/ 02:13 AM October 26, 2015

SAN MIGUEL Energy Corp. (SMEC) has filed in the Department of Justice a plunder complaint against the head of the Power Sector Assets and Liabilities Management Corp. (PSALM) and officials of two other private energy firms accused of entering into an alleged anomalous deal in 2009 that supposedly resulted in government losses of P14 billion.

In a 20-page complaint-affidavit filed on Oct. 21, SMEC general manager Elenita Go charged PSALM president and chief executive officer Lourdes Alzona; Suguru Tsuzaki, president of Team Philippines Energy Corp. (TPEC); Koichi Tamura, executive vice president of Team Sual Corp. (TSC), and several John and Jane Does with plunder as defined under Republic Act No. 7080 and violation of Section 3(e) of RA No. 3019, or the Anti-Graft and Corrupt Practices Act.


Go said the case involved the allegedly illegal grant of the so-called “excess capacity” of the Sual Power Station to TPEC, which enabled it to receive around P17.3 billion at the expense of the government and SMEC.

In June 2009, PSALM entered into a memorandum of agreement (MOA) with TPEC and TSC, which served as the independent power producer (IPP), for the coal-fired Sual Power Station in Pangasinan.

The MOA, according to the complaint, gave birth to the concept of “excess capacity” wherein it was agreed that the “contracted capacity” would be 500 megawatts net per unit while the “nominal excess capacity” would be 100 MW per unit.

TSC shall be entitled by itself and/or through TPEC to market, offer, sell or supply the nominal excess capacity to any customer, independent of and without payment of any fee to PSALM and/or the National Power Corp. (Napocor).

In August 2009, SMEC won the bidding as the IPP administrator for the 1,000-MW contracted capacity of the power station.

Given priority

Under the MOA, when there is excess capacity—or when the available net capacity of each unit of Sual is more than the net contracted capacity of 500 MW per unit—TPEC would get its 100-MW nominal excess capacity per unit.

Go pointed out, however, that the IPP administration agreement guaranteed the Napocor, through the SMEC, the net contracted capacity of 500 MW per unit which, SMEC alleged, it was not able to get because TPEC’s 100-MW nominal capacity was given priority in accordance with the MOA.

“Based on the settlement formula in the MOA, the TPEC trading amount is settled first and kept intact most of the time while the PSALM trading amount [for SMEC] is only the balance after the TPEC trading amount is deducted from the total trading amount. Thus, for example, when the net generation of Sual Unit 1 was 585 MWh, TPEC’s 100 MWh was settled first and only the remainder (485 MWh) went to SMEC,” the complaint stated.


“This resulted in loss of income to SMEC,” Go said, calling the MOA “illegal.”

Due to such an “anomalous and absurd outcome,” SMEC asked PSALM to review the legality and regularity of the MOA formula in 2013. According to the complaint, however, PSALM sided with TPEC and endorsed a proposal to share the generating imbalance on a pro rata basis.

No reply

SMEC said it questioned the legality of the entire MOA beginning February but PSALM no longer replied to the company’s letter sent last August.

SMEC pointed out that TPEC illegally benefited from the excess capacity to the detriment of the Philippine government and SMEC.

It stressed that from November 2009 to September 2013, TPEC was able to gain P17.3 billion from the 2.82 million MWh generated as the “excess capacity” using the MOA settlement formula.

It explained that from the said amount, P14 billion should have gone to the government in accordance with the energy conversion agreement which states that the “entire power station output” should be dedicated to the Napocor, while P3.3 billion should have been given to SMEC, corresponding to the capacity that was taken from SMEC’s 1,000 net contracted capacity.

SMEC noted that all elements of plunder were present due to the supposed connivance of Alzona with TPEC and TSC by continuing the implementation of the questioned MOA; the amassing of ill-gotten wealth committed through the MOA; and the amount involved is more than P50 billion.

SMEC added that the elements of graft were also present because the government suffered injury and a private party was given unwarranted benefit under the MOA.

SMEC is the power arm of conglomerate San Miguel Corp.

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TAGS: Business, News, Plunder, power industry, Power Sector Assets and Liabilities Management Corp., Sam Miguel Energy Corp.
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