No turnover plan yet for Ilijan plant, according to PSALM
By Myrna M. Velasco – August 16, 2021, 8:00 AM
from Manila Bulletin
Even if the build-operate-transfer (BOT) contract for the 1,200-megawatt Ilijan gas-fired plant will expire by June next year, state-run Power Sector Assets and Liabilities Management Corporation (PSALM) indicated that there is no definitive plan yet on turnover to its independent power producer administrator (IPPA) or the buyer of the facility’s supply contract when it was privatized by the government.
According to PSALM President Irene Joy B. Garcia, there had been “no meetings on the actual turnover” that happened between the government-run company and Ilijan IPPA South Premiere Power Corporation (SPPC) of the San Miguel group.
Under the bidding terms in the privatization of the power supply contracts of the independent power producers (IPPs), at the end of the BOT contract, the specified power plant will have to be turned over to the IPPA – which in the case of the Ilijan plant is SPPC.
Nevertheless, there is a pending dispute between PSALM and the SMC subsidiary firm relative to the gas-fired power facility’s contract because of the differing calculations that the parties have on capacity fee payments – and the cases filed have yet to be resolved in the Courts also.
Garcia said the only subject matters discussed in recent meetings with SPPC had been on “the need to order critical spare parts for next year for Ilijan, the scheduling of inventory and the scheduling of trainings to be conducted by Keilco (Kepco Ilijan Corporation).”
Under the original BOT contract with National Power Corporation, a precursor company of PSALM, it has been Korea Electric Power Corporation (KEPCO) that was engaged by the government-run firm then to develop and operate the plant until the expiration of the contract by June 2022.
Then in the privatization of the supply contract carried out by PSALM in 2010 for the Ilijan plant, it has been stipulated that the plant’s ownership will be yielded to the IPPA at zero-value at the end of the cooperation period – and that shall be on June 5, 2022.
In the turnover of ownership of power plants, it normally takes one to two years to flesh out all the details with government – including those on compliance of deliverables by the parties-in-interest.
As of the last audited financial statement of PSALM, it was still pursuing P21.87 billion worth of receivables from SPPC because of the disputed capacity payments.
The Ilijan plant’s continued operation would also be saddled with dilemmas on fuel that shall be utilized for its electricity generation, as its gas sale and purchase agreement (GSPA) with the Malampaya field operator will already cease next year.
PSALM previously inked a memorandum of understanding (MOU) with another state-run firm Philippine National Oil Company (PNOC) for the use of its ‘banked gas’ in the Ilijan plant, but there is no certainty that such resource can still be extracted given the depleting state of the Malampaya gas field.
