DOF moves to intervene in PSALM, SMC dispute

Energy Secretary Zenaida Monsada said the Department of Finance (DOF) is set to intervene in the dispute between state firm Power Sector Assets and Liabilities Management Corp. (PSALM) and San Miguel Corp. (SMC) over the latter’s contracts to sell the output of two major power plants, Ilijan and Sual.

PSALM, which has not had major privatization efforts completed this year due to various delays (including one on privatizing the output of the Mindanao coal plant), was set to terminate SMC’s contract but was taken to court by the conglomerate led by businessman Ramon Ang.

“We (in the PSALM board of directors) are thinking of discussing the dispute. The chair of PSALM is the DOF,” Monsada said.

Monsada said the DOF is asking to “sit down” on the matter.

“The schedule is being arranged. It’s a bit of a concern because it is a government matter, if they lacked action in something or overstepped in their actions on some things,” she said.

In October, SMC’s power generation subsidiary, San Miguel Energy Corp. (SMEC), accused PSALM chief executive Lourdes S. Alzona of plunder for allegedly allowing the Sual power plant’s operator, Team Energy, to illegally sell the excess power produced sans its knowledge.

Team Energy has since clarified that the agreements covering the plant’s output were all in place before SMEC became the power administrator of the plant, and that the same had been implemented for the past 16 years.

The power administration contract allows SMEC to sell the generation plants’ output to the spot market. The plant operator said all power trades are done through SMEC, and that the sale of excess power (around 200 megawatts) only takes place after the nominal 1,000 MW output of the plant is sold.

Team Energy also accused SMEC of not remitting to the plant operators a substantial portion of the proceeds of its sale of the excess capacity beginning October 2013.

With a capacity of 1,200 MW, the two-unit Sual power station in Pangasinan is the country’s largest coal-fired power plant.

Another SMC unit, South Premiere Power Corp. (SPPC), filed in September a petition to stop PSALM’s decision to terminate its power administrator contract for the 1,200-MW Ilijan combined cycle power plant in Batangas province.

The state-run firm had cited SPPC’s “continued refusal” to pay over P6 billion in unpaid fees. SPPC disputed the figure.

PSALM, which was formed under Republic Act 9136, or the Electric Power Industry Reform Act of 2001, manages all of Napocor’s assets, liabilities, contracts with independent power producers, real estate, and other assets.