PSALM: San Miguel’s payables are based on the bid it submitted for the Ilijan plant

21 Feb 2020

The payables of San Miguel’s South Premiere Power Corporation (SPPC) as computed by the Power Sector Assets and Liabilities Management Corporation (PSALM), are based on the bid that San Miguel offered to PSALM in 2010 for the Ilijan Power Plant. PSALM refutes SPPC’s claim that it has no payables due to PSALM considering it already remitted P314.6 billion. Notwithstanding such remittance, SPPC still owes PSALM P23.94 billion.

PSALM’s billings to SPPC, including the unpaid P23.94 billion, are based on the bid that San Miguel itself submitted to PSALM in April 2010 during the public bidding conducted for Ilijan’s Independent Power Producer Administration Agreement (IPPAA). The terms of the IPPA agreement were fully disclosed to all bidders including SPPC long before said public bidding. While SPPC’s payments to PSALM have now reached P314.6 billion, the fact is that this P314.6 billion is still deficient when payables are computed based on the bid submitted by San Miguel and on the IPPAA formula for computing payables. It is still short by P23.94 billion as of December 2019.

PSALM never claimed that no payment was received from SPPC. Rather, even if there were payments made by SPPC to PSALM, there remains P23.94 billion arrears that SPPC should pay.

“It is not fair for SPPC to complain that it has already paid too much to PSALM, or that it needs to pay even more, because these payments are all based on SPPC’s own bid, a business judgement of SPPC that it must honor regardless of any change in circumstances or any impact in its profit margin,” PSALM president & CEO Irene Besido-Garcia said.

In 2015, San Miguel took on a “bid-to-win” attitude to clinch the public bidding and become Ilijan’s IPPA. This strategy of San Miguel resulted in financial consequences that it must accept as the terms of the 2010 public bidding cannot be changed.

It is very important to stress that while PSALM’s termination of the IPPAA happened in 2015, the factual and legal bases of such termination were extensively reviewed and upheld by the current Board of Directors of PSALM. This current Board is composed of appointees of President Rodrigo Roa Duterte led by Secretary Carlos G. Dominguez of the Department of Finance and Secretary Alfonso G. Cusi of the Department of Energy. The standing instruction of the current Board is to collect the P23.94 billion arrears of SPPC.

Corporate Communications Division
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