September 10, 2015

Court issues TRO vs. termination of SMC IPPA contract

San Miguel Corp (SMC) disclosed today that it has secured a 72-hour restraining order vs. the plan by the Power Sector Assets and Liabilities Management Corp (PSALM) to terminate the independent power producer administration (IPPA) contract with SMC’s subsidiary South Premiere Power Corp (SPPC).

The IPPA contract covers SPPC’s 1,200 MW Ilijan natural gas-fired power plant. The case stems from a dispute between SPPC and PSALM on the interpretation of certain provisions related to the generation payments under the Ilijan IPPA agreement. SPPC initiated a dispute resolution process with PSALM last month.

In response, PSALM advised SPCC last 4 September that it was terminating the Ilijan IPPA agreement because of the latter’s failure to settle the alleged outstanding generation payments, and called on the US$60m performance bond. SPPC, however, is challenging the nullification of the termination notice of PSALM for lack of factual and legal basis. - WealthSec