An advocacy group has asked the government to go slow on the sale of public utilities days after a foreign buyer defaulted on the upfront payment for a state-owned power plant.
The Freedom from Debt Coalition (FDC) said the government should take the payment default as a sign to reverse its privatization program because it cannot guarantee lower power rates and quality service for local consumers.
FDC vice-president Wilson Fortaleza has demanded that the government stop its privatization effort, contending “it cannot even sell one of its best plants without under-the-table arrangements, without unethical acts.”
Fortaleza pressed on, saying “PSALM itself admits that the government continues to earn from the income generated by Masinloc these days,” and questioned “why it should sell one of its most profitable plants and make the consumers suffer in the process.”
He pointed out that the decision of Power Sector Assets and Liabilities Management Corp. (PSALM) to forfeit the $14-million performance bond of Malaysian consortium YNN “was long overdue.”
The FDC also chastised the government for catering to “dubious investors” who had no prior experience in the power sector and were mostly investment groups looking for a quick buck to the detriment of consumers.
As expected, the group said, “Berhad has not shown any indication of interest in running the plant as it has no track record in the power industry.”
YNN Pacific, which won the bid for the Masinloc plant in December 2004, was required under the asset purchase agreement it signed with PSALM to deliver the upfront payment in end-March this year; however, failed to make the payment after its Australian stakeholders left the consortium. The company sought an extension until end-June, which the government granted after Ranhill, a Malaysian engineering firm, began negotiations for the Australians’ stake in the consortium.
“This only proves that YNN has no financial capability at all to acquire Masinloc power plant,” Fortaleza said.
Ranhill Berhad, the would-be partner in YNN consortium, wants a power sales agreement between YNN and MERALCO. It reportedly set the power supply contract with MERALCO as a condition for the release of its first tranche for its acquisition of YNN.
The FDC has decried the conditions set by Ranhill-Berhad as a tool for a possible hiking of power rates: “This will in effect bind the consumers to a new power contract, which could lead to higher power rates in the offing as YNN will recover through the contract its $561-million bid of Masinloc including the 12 percent interest it will have to pay for the balance after the $227-million initial payment is made. This is a clear manifestation of the obvious interest of Berhad in coming in as a partner of YNN.” ABS CBN NEWS
The Freedom from Debt Coalition (FDC) said the government should take the payment default as a sign to reverse its privatization program because it cannot guarantee lower power rates and quality service for local consumers.
FDC vice-president Wilson Fortaleza has demanded that the government stop its privatization effort, contending “it cannot even sell one of its best plants without under-the-table arrangements, without unethical acts.”
Fortaleza pressed on, saying “PSALM itself admits that the government continues to earn from the income generated by Masinloc these days,” and questioned “why it should sell one of its most profitable plants and make the consumers suffer in the process.”
He pointed out that the decision of Power Sector Assets and Liabilities Management Corp. (PSALM) to forfeit the $14-million performance bond of Malaysian consortium YNN “was long overdue.”
The FDC also chastised the government for catering to “dubious investors” who had no prior experience in the power sector and were mostly investment groups looking for a quick buck to the detriment of consumers.
As expected, the group said, “Berhad has not shown any indication of interest in running the plant as it has no track record in the power industry.”
YNN Pacific, which won the bid for the Masinloc plant in December 2004, was required under the asset purchase agreement it signed with PSALM to deliver the upfront payment in end-March this year; however, failed to make the payment after its Australian stakeholders left the consortium. The company sought an extension until end-June, which the government granted after Ranhill, a Malaysian engineering firm, began negotiations for the Australians’ stake in the consortium.
“This only proves that YNN has no financial capability at all to acquire Masinloc power plant,” Fortaleza said.
Ranhill Berhad, the would-be partner in YNN consortium, wants a power sales agreement between YNN and MERALCO. It reportedly set the power supply contract with MERALCO as a condition for the release of its first tranche for its acquisition of YNN.
The FDC has decried the conditions set by Ranhill-Berhad as a tool for a possible hiking of power rates: “This will in effect bind the consumers to a new power contract, which could lead to higher power rates in the offing as YNN will recover through the contract its $561-million bid of Masinloc including the 12 percent interest it will have to pay for the balance after the $227-million initial payment is made. This is a clear manifestation of the obvious interest of Berhad in coming in as a partner of YNN.” ABS CBN NEWS
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