Metro Manila (CNN Philippines, March 10) — San Miguel Corporation has offered to pay in advance ₱22.68 billion in capacity charges for its Ilijan power plant, calling it a “gesture of good faith” amid a pending court case with the government.
SMC President and Chief Operating Officer Ramon Ang said he was offering to settle the fees for its 1,200-megawatt Ilijan plant to the Power Sector Assets and Liabilities Management Corporation (PSALM) early to help the state-run firm manage its debts.
“Right now, the best and quickest way we can do this ahead of a decision on our case is to fully pay the P22.6 billion remaining balance in capacity charges of SPPC (South Premiere Power Corporation) for the Ilijan power plant in full,” Ang said in a statement on Tuesday.
The contract for the power plant in Batangas prescribes a fixed monthly payment for capacity and generation fees, which the firm estimates to be worth ₱392 billion when the deal expires in June 2022. But the conglomerate said SPPC won the bidding for the power facility for just $870 million, or just roughly ₱43.9 billion.
SMC said buying a brand new power plant these days would only cost the company about ₱40 billion.
“We hope that PSALM interprets this prepayment as a gesture of good faith on our part,” Ang said. “Like them, we also have a purpose. Ours is to provide consumers with stable and more affordable electricity.”
San Miguel said SPPC has paid ₱314.6 billion to PSALM as of January 2020, split into ₱240.7 billion in generation charges and ₱73.9 billion in capacity fees.
However, Ang clarified that the payment is separate from the pending case between SPPC and PSALM.
The government is chasing after ₱23.9 billion in generation charges from the SMC unit since 2015 due to differences in computing generation charges. PSALM computed the private firm’s dues against electricity prices quoted in the Wholesome Electricity Spot Market, but SMC said a fixed rate approved by the Energy Regulatory Commission should be used.
Ang added that the early payment would help raise fresh funding for state projects, as well as efforts to contain the novel coronavirus outbreak.
