Tuesday, June 27, 2006

Quick, seal Masinloc deal while GMA is out

POSTSCRIPT By Federico D. Pascual, Jr.
The Philippine Star

AGAINST LAW & LOGIC: The administration says it might not see again a big offer for the power plant in Masinloc, Zambales, if it orders a new bidding after voiding the $561.74-million winning bid and confiscating the $14.14-million bond of the winner for repeatedly failing to pay the down payment.

The Power Sector Assets and Liabilities Management Corp. (Psalm), which oversees the transaction, says that it is better to give YNN Pacific Consortium, the winning bidder, more time to produce the $227.54-million down payment than to enforce the law on failed biddings.

This unusual position of Psalm goes against the law, against logic and against the facts.

It betrays a lack of confidence in the marketability of the 600-megawatt Masinloc plant (the most valuable among the power generators being bid out), a bias for YNN and its boss Sunny Sun, and canine devotion to whoever is dictating Psalm’s moves to deliver Masinloc to the Malaysian firm Ranhill Berhad. * * *
RIGHT CONNECT: It is clear that YNN may have the connections but not the money to make good its $561.74-million offer for Masinloc. Its paid-up capital at the time of the bidding was a measly P625,000, which was raised to P2.5 million only this month after the anomaly was found out.

Another proof that YNN does not have the capacity to pay is that it will get the $227.54-million for the down payment not from its own pocket but from Ranhill, which is not a party to the bidding but is just buying out YNN from Sun and his associates for another $8 million.

A smart operator itself, Ranhill is holding tightly to its money, which according to its disclosure to the Malaysia Stock Exchange actually consists of funds to be borrowed from some bank. * * *
MERALCO DEAL: Ranhill has made clear that it would pay YNN/Sun its $8-million buyout price, the $227.54-million overdue down payment for Masinloc, and the balance of the $561.74-million bid price only if YNN would deliver on a silver platter a power supply contract with the Manila Electric Co. (Meralco).

Now if you were a government official with your hand on the Masinloc lever would you follow the law on failed biddings, and then order a new bidding at the risk of derailing the gravy train?

But why would Psalm and the big boss be afraid that investors in a new bidding may not have enough money if it is true as we are being made to believe that Ranhill has $8 million and an additional $561.74 million to buy YNN and Masinloc in one blow? Cannot Ranhill itself now bid directly?

Why is Psalm and the people upstairs afraid to seize the performance bond and displease YNN despite the glaring irregularities surrounding its bid to secure and then sell Masinloc even before it would generate one watt of electricity? What hold has YNN, and maybe Ranhill, have on them? * * *
SAVE $8M: What is more logical and more profitable for the government is to cancel the last bidding and seize the $14.14-million performance bond of YNN (which Ranhill merely passed on to it because YNN had no money in the first place).

If Ranhill is not an adventurer like YNN but is coming in as a bonafide investor, it can save at least $8 million by waiting for the cancellation of the YNN award and the opening of new bidding where it can participate armed with insider information.

Going to another round of bidding may pose some risk (in the sense that Ranhill might lose to other parties), but bidding directly instead of buying out a middleman/broker may turn out cheaper than financing the false steps of YNN.

By their body language, one can feel that Psalm and its bosses are committed to YNN and Ranhill. Guess why.

If the game plan is to force the transaction despite the clear irregularities, they might rush it in the next few days while President Gloria Arroyo and her husband are in Europe ostensibly unaware of the Masinloc stink.

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