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Pending case may hobble turnover of Ilijan plant to SMC unit

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By Myrna M. Velasco

A pending case on the P20-billion contract cost claims against the privatized power supply contract of the 1,200-megawatt Ilijan gas plant may hobble its turnover to prospective owner South Premiere Power Corporation (SPPC) by year 2022.

Irene Joy Besido-Garcia

PSALM President Irene Joy B. Garcia

In an interview with reporters, Power Sector Assets and Liabilities Management Corporation (PSALM) President Irene Joy B. Garcia admitted that the unresolved legal case could be a hurdle to the asset’s turnover if no court decision will be rendered at the lapse of the Ilijan plant’s build-operate-transfer (BOT) contract with government.

Being the winning bidder of the Independent Power Producer Administrator (IPPA) contract of the Ilijan plant, San Miguel Corporation subsidiary SPPC should already be the rightful owner of the gas-fired power facility by year 2022.

“Our position is: there is a breach, so strictly speaking, we cannot turnover. On their (SPPC’s) part, they’re saying there’s no breach, so they sought for a TRO (temporary restraining order)/injunction and they got it. So at the end of the day, the Court will have to ascertain how to move forward,” Garcia stressed.

Given the nearing timeline and required operational winding down of plant operator Korea Electric Power Corporation (Kepco) prior to turnover, questions are already raised how PSALM shall be resolving the ownership changeover concern.

Garcia said one legal remedy will be for PSALM to file a supplemental or urgent motion in case it won’t still be decided by the Courts within a timeframe close to the lapse of the BOT deal.

“For the turnover, it’s the Court that will resolve it because the legal issue of whether or not there is a breach is also with that Court – we cannot file separately because that’s splitting courses of action,” the PSALM chief executive explained.

It must be recalled that San Miguel Corporation President Ramon S. Ang earlier made an offer to PSALM that he will settle the P20-billion Ilijan claims, but he will lodge a counter-billing of roughly P200 billion.

When asked if Garcia will be amenable to that arrangement, she replied in jest: “of course not, coconut!”

She thus noted that what we really need to do is “to continue with the Court case…remember, our legal position is: they have not been paying the fees due PSALM in accordance with the bidding amount that they submitted to us. So what’s happening now is: we’re billing them and they’re paying us in accordance with their legal position.”

Garcia added “we continue to bill them based on our legal position, so we are just hoping that there should be a resolution before that maturity of the IPP deal.”

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