Once more, critics of San Miguel Corp. (SMC) are taking the opportunity presented by its termination of two other power supply agreements with Manila Electric Company (Meralco) to criticize the
But under these contracts —Section 18.6.2 governing termination clauses, to be exact—San Miguel has the right to unilaterally terminate its power supply deals with Meralco if energy regulators fail to approve them six months after both parties seal the deals. And it’s explicitly stated that neither party will be liable for such termination, and no penalties will be imposed.
In the past, it was not uncommon for the ERC to order the amendment contracts before giving their go signal. That hasn’t happened yet, but Biz Buzz hears that San Miguel wasn’t keen on waiting around any longer for potentially unfavorable contract revisions that the regulator may order to be rammed down its throat, given the recent history of adverse ERC rulings.
As for Meralco, it will now have to open bidding once more for 1,800MW of “greenfield” power supply for 2024. Once that happens, and unless the energy landscape changes dramatically soon, our sources say that the parties who will be eligible to bid for the new power supply deals under new and more current terms will be San Miguel and Aboitiz. Now that’s interesting.
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