A REGIONAL trial court has prevented state-run Power Sector Assets Management (Psalm) Corp. from terminating the Independent Power Producer Administration Agreement (IPPAA) between it and South Premiere Power Corp. (SPPC) covering the appointment of SPPC as the IPP administrator of the Ilijan power plant in Batangas.
In a disclosure to the Philippine Stock Exchange (PSE), San Miguel Corp. (SMC) said the Mandaluyong RTC Branch 209 has issued a temporary restraining order (TRO) enjoining PSALM from terminating the IPPAA contract it entered into with SPPC.
SPPC, a wholly owned subsidiary of SMC Global Power Holdings Corp., was the approved independent power producer administrator for the 1,200-MW Ilijan natural gas-fired power facility in the privatization process undertaken by PSALM on its supply contract.
In its order, the court said in part, “Wherefore, a 72-hour Temporary restraining Order is issued, to wit: Prohibiting PSALM from exercising its rights as Administrator of the IPP contract of the National Power Corp. (Napocor) for the Ilijan Power Station and from disposing in any manner of the money received from ANZ under the Performance Bond except as directed by the Court.”
The company and PSALM have an ongoing dispute arising from the interpretations of certain provisions related to generation payments under the Ilijan power agreement.
In a letter on August 12, SPPC initiated a dispute resolution process with PSALM.
But in its reply, PSALM informed SPPC that it was terminating the Ilijan IPPAA agreement because of the latter’s alleged failure to settle outstanding generation payments, and called on the Performance Bond in the form of a Stand-By Letter of Credit of SPPC with ANZ Bank in the amount of $60 million.
PSALM documents showed that SPPC owes the former P5.6 billion of “disputed generation payments” under the IPPA arrangement for the Iljan plant.
In the state-run power firm’s statement of account, the total booked receivables from SPPC had been placed at P79.8 billion, but the latter only settled P74.2 billion – with the rest subject to dispute resolution.
PSALM first sought an opinion from the Office of the Government Corporate Counsel (OGCC) for the interpretation of some of the provisions of its IPPA agreement with SPPC.
In turn, SPPC filed a complaint to nullify the termination notice of PSALM for lack of factual and legal basis.
With SPPC’s complaint, the court issued a 72-hour TRO preventing PSALM from terminating the IPPA agreement.