Philippines: San Miguel suspends plans to list energy unit

The 1000MW Sual coal-fired power plant. Visual from SMC Global Power's website.

San Miguel Corp has suspended its plans to list its energy unit SMC Global Power Holdings Corp on the Philippine Stock Exchange due to unresolved contractual issues with the Power Sector Assets and Liabilities Management Corp (PSALM), a wholly-owned and -controlled government entity in the Philippines.

The dispute arises from the Independent Power Producer Administration Agreements (IPPAs) between San Miguel and PSALM relating to the Ilijan and Sual coal-fired power plants that have a combined capacity of 2,400 MW. The plants are located in Batangas and Pangasinan provinces, respectively.

This was the third time that San Miguel has deferred the IPO of the shares of stock of SMC Global Power. First was a $700-million IPO plan in 2013 deferred to 2014, then slated anew last year but was cancelled due to bleak market conditions.

San Miguel later on sought to launch the IPO by the third quarter of 2017 by raising around $235 million (P12 billion) to over $527.8 million (P27 billion) from the maiden offer of 290 million to 385 million shares priced at P44 to P71 apiece.

PSALM terminated San Miguel’s IPPA deal on alleged unpaid payments in relation to the 1,200-MW Ilijan combined cycle power plant in Batangas province, that it recently reported to have bloated to P12 billion. PSALM is the manager of assets and liabilities of National Power Corp (NPC).

San Miguel corporate information officer Ferdinand Constantino explained that in order to address the issues, the subsidiaries of SMC Global Power were left with no other recourse but to initiate the appropriate court proceedings and actions with the Department of Justice (DoJ) against PSALM and its key executive officers.

“Contrary to the press statements made by PSALM, the amounts due to PSALM under the IPPAs have been paid in full by SMC Global Power and its subsidiaries, as advised by Mr. Ramon S. Ang, president and chief operating officer of San Miguel Corporation,” Constantino told the local bourse. “The extent of such payments have been presented to the courts and the DoJ.”

SMC Global is one of the largest local power firms. Besides the Ilijan and Sual power plants, the company also administers the 345 MW San Roque Hydroelectric Multipurpose Power Plant in Pangasinan, and the Greenfield Power Plants in Davao City and Bataan province that are designed to produce up to 900 MW of electricity via modern combustion technologies.

The Ilijan natural gas plant is owned by Korea Electric Power Corp that was established in 2000 under a BoT (build-operate-transfer) scheme that will expire by June 4, 2022. San Miguel’s South Premiere Development Corp won the bid for the contract to administer the plant in 2010.

Sual Plant is being operated by Team Energy, a joint venture between Marubeni Corp and Tokyo Electric Power Corp.

San Miguel’s last trading price increased 0.21 per cent or P0.200 to close at P97.60 per share on Wednesday, September 27.

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Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.