Wednesday, June 28, 2006

Extend Masinloc deadline, face graft raps, Energy execs warned

By Angie M. Rosales

Energy officials involved in the sale of the biggest asset of the debt-ridden National Power Corp. (Napocor) under the mandated privatization plan, the controversial 600-megawatt Masinloc coal-fired plant in Zambales, could possibly earn graft charges the moment they pursue their announced plans of granting another extension of the deadline for YNN Pacific Consortium to fulfill its downpayment of $227 million due on Friday.

Specifically, executives of the Power Sector Assets and Liabilities Management Corp. (Psalm) may be held liable before the Office of the Ombudsman, being the body involved in the sale of Masinloc that was bid out in December 2004, senators yesterday claimed.

Senate Minority Leader Aquilino Pimentel Jr. and Sen. Sergio Osmena III issued the stern warning as they noted the forthcoming deadline set by Psalm on YNN of June 30 on the payment of the so-called upfront fee, which represents 40 percent of the bid price the private firm offered in bagging the $562-million Masinloc contract.

“They (Psalm officials) could be charged with (graft) for granting unwarranted benefits to YNN,” Pimentel said, which possibility Osmeña seconded.

He added the same officials might also be indicted for what he called a grossly disadvan-tageous deal made with the power company, whose financial and technical capabilities are under question.

Osmeña said the “gist is that YNN did not pay (the upfront fee for Masinloc on the date specified in the sale agreement). And Psalm did not forfeit its deposit. It (Psalm) even paid its officers a success bonus for a non-consummated sale.”

He and Pimentel were referring to earlier reports that Psalm supposedly again agreed to extend the deadline of payment by YNN, allegedly until August this year in case the firm would default on its financial obligations.

The original closing date was last March.

The report on the purported third deadline came just as when speculations were rife that YNN was on the lookout supposedly for a new partner after its Australian investor backed out from the contract.

Recent developments, however, showed that the consortium managed to convince the Malaysian firm Ranhill Berhad, which later was alleged to have decided to buy out YNN from the deal, a matter that lawmakers bewailed as unwarranted under the contract.

Pimentel has since proposed to the government to nullify the sale to YNN, which has repeatedly reneged on its payment of the $277- million upfront fee, and instead declare a failed bidding and hold a new one.

Besides the matter of posing a violation to the agreed scheme in disposing of Masinloc, the senator said he is also wary over Ranhill allegedly eyeing raising the long-overdue financial obligation.

Pimentel added YNN’s performance bond – originally amounting to $11.2 million and later increased to $14 million – should be forfeited in favor of the government in accordance with the terms and conditions of the sale agreement.

“YNN Pacific’s agreement with Psalm should be cancelled and its bond should be confiscated,” he said, adding Ranhill should be treated as prospective bidder.

Ranhil Berhad earlier disclosed plans to take over the YNN Consortium and raise more than $230 million to take control of the Masinloc facility.

The entry of Ranhil Berhad will supposedly enable YNN to pay the $227-million upfront fee before the expiration of the reextended payment deadline on June 30.

The Masinloc facility, the biggest coal-fired plant of the Napocor, was awarded in a bid sale in Dec. 2004 to YNN Pacific, composed of the Filipino firm YNN Holdings and Australia’s Great Pacific Financial Group.

YNN Pacific was given nine months to pay the upfront fee of $227 million (representing 40 percent of the $561.7- million acquisition price).

But when the consortium failed to pay the obligation on Dec. 31, 2005, the deadline was extended to June 30, 2006.

During the six-month extension, YNN Pacific reportedly negotiated with Ranhill Berhad to become its new investment partner.

Bayan Muna Rep. Teodoro Casiño, in a statement on the eve of the June 30 deadline set by Psalm for YNN to come up with the upfront fee, said the government should now rescind its contract of sale with YNN and let the government operate the power plant.

“The government is well off operating the plant, which produces one of the cheapest electricity rates at P2.80 per kilowatt-hour. It would increase to more than P4.00 per kilowatt-hour once it is sold to the private sector,” Casino noted.

Rep. Aurelio Umali of Nueva Ecija, for his part, also yesterday said the government should no longer allow the extension of the deadline for YNN Pacific to pay the 40 percent downpayment for the $562-million power plant.

Umali also noted that Psalm had already extended the deadline and “extending it again would be detrimental to the government.”

Gerry Baldo - TRIBUNE

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