San Miguel Corporation (SMC) president Ramon S. Ang is ready to pay the capacity charges for the 1,200 MW Ilijan Power Plant in advance of P22.68 billion to help defray the Power Sector Assets and Liabilities Management Corp fund. (PSALM) to pay off their debts.
The capacity charges represent SMC's capital payment to PSALM as administrator of the Ilijan plant.
In a letter to Ang at PSALM, he clarified that his offer was separate from the alleged 'overdue receivables' of their power arm South Premiere Power Corp (SPPC), for P23.9 billion. The matter has been at the root of the pending case since 2015 due to
different camps bill the generation charges.
PSALM used the generation charges calculation to rate the Wholesome Electricity Spot Market (WESM) to maximize its revenue from the IPPA, while the SPPC relied on fixed rates approved by the Energy Regulatory Commission (ERC).
According to Ang, the money they offer will help PSALM to raise funds and assist with government projects, especially in dealing with the problem of coronavirus disease.
“While we have an ongoing court case with PSALM regarding the computation of generation fees for the Ilijan plant, as a stakeholder in the power industry, and more importantly, a proactive partner of government in nation-building, we sincerely want to help PSALM raise funds for government, ”Ang promised.
"Right now, the best and quickest way we can do this ahead of a decision on our case, is to fully pay the P22.6 billion remaining balance in capacity charges of SPPC for the Ilijan power plant, in full," added the SMC chair.
Under the original IPPA contract, in return for the right to sell electricity from the power plant, SPPC will pay PSALM a fixed monthly payment by June 2022. The SMC, through the SPPC, wins the bid for Ilijan plant for $ 870 million.
By the time the contract expires in 2022, SPPC will have paid P392, almost double the bid price divided by P97.5 billion fixed monthly and capacity fees, and P294.7 generation fees.
A brand new power plant like Ilijan is now worth P40 billion.
As of January 2020, SPPC has already paid PSALM P240.7 billion generation charges and P73.9 billion capacity fees.
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