TeaM Energy’s comments on SMEC’s plunder suit

This is in reply to a news article titled “San Miguel sues PSALM over P17.3-B ‘plunder’” (Second Front Page, 10/26/15) by Jerome Aning, and to a subsequent column written by Conrado Banal (“Capacity to rob,” Business, 11/2/15), which essentially contained similar information on a plunder complaint filed against subsidiaries of TeaM Energy Corp. by San Miguel Energy Corp. (SMEC). Please allow us to briefly state some points to jointly address the issues raised in both pieces:

1. TeaM Energy is shocked and perplexed by the plunder complaint filed by SMEC. We find it to be baseless and without any merit.

2. Our track record shows that we have abided by and respected all the country’s laws and regulations; and we have operated with utmost integrity in all our business dealings and contracts.

3. Our Sual Power Plant was designed and constructed to produce a net capacity of 1,200 megawatts (MW); only 1,000 MW has been contracted to the National Power Corp. (Napocor) under our 1994 Energy Conversion Agreement.

4. TeaM Sual Corp. (TSC) is being paid by the Napocor only for the 1,000-MW contracted capacity. TSC owns the 200-MW excess capacity.

5. Contrary to Banal’s claim, this 200-MW excess capacity is sold in the open market at fair and competitive rates. Our income from this is not “guaranteed,” as stated in his column, nor is it paid for by government. This had already been in existence since 1999 and was present prior to SMEC’s entry as our independent power producer administrator (Ippa) in 2009.

6. The memorandum of agreement (MOA) being questioned by SMEC was entered into by the Power Sector Assets and Liabilities Management Corp. (PSALM), TSC and TeaM Philippines Energy Corp. (TPEC) on June 18, 2009, prior to the entry of SMEC as Ippa of the Napocor’s 1,000-MW contracted capacity.

7. The MOA is legal and aboveboard. This went through the regular approval process of the respective boards of the Napocor and PSALM—composed of the secretaries of finance, energy, budget, trade, interior, agriculture, environment, justice, and of the National Economic and Development Authority.

8. TPEC does not have priority over the dispatch of the 200-MW excess capacity because the dispatching of capacity is based on competitive bidding under wholesale electricity spot market rules. The MOA states that the contracted capacity of 1,000 MW gets priority over the excess capacity of 200 MW when due to the fault of TSC, the Sual Power Plant is unable to make available its full net capacity of 1,200 MW.

9. We are confident that after a full appreciation of the facts, we will be able to clear the name of our organization, and of our officials who were unfairly and unjustly dragged into this nonissue.

—FROILAN GREGORY H. ROMUALDEZ III, head of external affairs, TeaM Energy Corp.