PSALM addresses IPPA concerns in accordance with agreements

18 Sep 2017

Deficiencies in obligations on the part of Independent Power Producer Administrators (IPPAs) are addressed according to the terms stipulated under the IPPA Administration Agreement (IPPA AA), the Power Sector Assets and Liabilities Management (PSALM) Corporation disclosed.

“In every decision we make, we ensure that we strictly followed what is written in the IPPA AAs, putting in mind that PSALM’s paramount role is to uphold the interest and welfare of the government and to protect it from financial repercussions when issues arise such as the non-compliance with contractual financial obligations,” PSALM Officer-in-Charge, Lourdes S. Alzona, said.

IPPAs’ financial obligations to PSALM are privatization proceeds utilized for paying IPPs for the costs incurred in producing electricity. Non-compliance will compel PSALM to contract new loans to shoulder these obligations to the detriment of the government and consumers. These borrowings will be recouped from consumers in the form of Universal Charges.

PSALM ensures that the final IPPA AAs equitably represent sides of involved parties, and is certain that investors before acceptance of the IPPA AAs have well-thought of and considered the market risks inherent in the business and have carefully studied business strategies that will allow them to yield profit margins.

As to the implementation of Unified Leyte Geothermal Power Plant, through PSALM trading strategies, it is ensured that the strips of energy are fully dispatched, providing IPPAs security from market volatility. PSALM assists IPPAs in their bilateral contract applications with the Energy Regulatory Commission by providing them support documents used as basis for approval by the regulatory body.

PSALM to exhaust all diplomatic steps before the necessary termination of IPPA AAs is put into effect. Negotiations and mediations as provided in the IPPAs which are more amicable schemes can be employed to resolve differences arising from contractual interpretations, including contract termination, among others.

However, Alzona said that discussions and agreements which transpired between PSALM and the IPPAs are all elevated to the PSALM Board for final direction before these become relevant and binding. ###

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