Phinma threatens lawsuit as Psalm terminates deal

By Lenie Lectura – September 11, 2017

from Business Mirror

PHINMA Energy Corp. on Monday threatened to file a case against the Power Sector Assets and Liabilities Management Corp. (Psalm) for terminating the power contract to sell the output of a geothermal-power facility.

“The board of directors of Phinma Energy today authorized the filing of a case against Psalm Corp., to restrain the termination of the administration agreement for the selection and appointment of Independent Power Producer Administrators for the Strips of Energy of the Unified Leyte Geothermal Power Plants [ULGPP] in Tongonan, Leyte on grounds of administrator’s default,” Phinma Energy said in a statement issued on September 11.

Psalm has yet to comment.

Phinma Energy, formerly Trans-Asia Oil and Energy Development Corp., was declared on November 7, 2013, as one of the winning bidders with the right to administer 40-megawatts (MW) “strips of energy” from the ULGPP.

Under the terms, the winning bidder would manage the contracted output of the power plant. The output could be traded on the Wholesale Electricity Spot Market.

A day later, or on November 8, Supertyphoon Yolanda-hit Region 8 and led to extensive damages to the ULGPP. Psalm awarded the strips of energy to the bidders a year later.

Phinma Energy said in several letters to Psalm the company formally sought the renegotiation of the agreement and proposed several measures for relief. Representatives of Psalm and Phinma Energy met on several occasions, the latter said. Phinma Energy added it wrote Psalm, expressing the “difficulties suffered by the administrators under the agreement”.

“Phinma Energy, through counsel, wrote a letter exercising its right to withdraw from the agreement. Discussions on the termination were initiated,” the listed firm said in its disclosure to the Philippine Stock Exchange. “However, Phinma Energy received a notice from Psalm of the administrator default and Psalm has resolved to terminate the Agreement and forfeit the performance bond.”