Thursday, July 06, 2006

Will lessons be learned from Masinloc hijacking?

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

WE NEVER LEARN: One of the reasons why we Filipinos do not seem to rise from where we had fallen is that we have no follow-through. We do not seem to learn from our mistakes.

The stinking Masinloc deal has just been put to a rightful closure with the decision of the Power Sector Assets and Liabilities Management Corp. (Psalm) to forfeit the $14-million performance bond of winning bidder YNN Pacific Consortium for failing to deliver the down payment with the lapse of three deadlines.

The $227-million down payment is 40 percent of YNN’s winning bid of $561 million for the 600-megawatt coal-fired power plant in Masinloc, Zambales, bid out by Psalm. It is the most valuable among generating assets being privatized by the National Power Corp.

In painful slow-mo, Psalm is expected to proceed to schedule another bidding – after which the YNN chapter of Masinloc would likely be forgotten like a bad ream? * * *
TEKA MUNA: Before we step into another pit, let us be sure where we made mistakes and what we can do to avoid the same missteps.

Let us also file charges against those in the government and in private business who plotted the near hijacking that was foiled only because a wide-awake public was watching the thieves every step of the way.

The problem started when Psalm allowed itself to be taken by

YNN’s $561-million bid price. Either in awe or in cahoots, Psalm neglected its mandate to screen thoroughly and objectively the qualifications of the bidders.

The result as we all now know is regrettable – the process was dominated by a contract peddler whose game plan turned out to be to grab the contract then sell it at a huge profit. It never intended and could never operate Masinloc.

It did not have the expertise or the money, yet Psalm allowed it to bid. I wonder if Psalm President Nieves L. Osorio will agree that somebody should go to jail for that. * * *
NO CHICKENJOY: It might lighten the load of Ms Osorio if she went through her own mea culpa’s. But having found her taciturn, we will continue tossing around what we see are the lessons of Masinloc.

We have a saying in the native language admonishing us never to count the chicks before they are hatched.

Osorio and her gang of optimists in Psalm not only counted the chicks but even had fried chicken served. They granted themselves a P10-million bonus for the "successful" sale of the five-year-old Masinloc plant for the fantastic price of $561 million.

The problem was that a killjoy at the Commission on Audit did not relish chickenjoy. The CoA disallowed the granting of bonuses worth P10 million to Psalm officials before a single cent from the deal had trickled into the coffers.

Being a non-lawyer, I do not know if there is a law against premature salivating. But surely it was bad form to lust after that P10 million before it could be rightfully earned and when the rest of the bureaucracy was complaining of fund shortage. * * *
VALUE-ADDED: Before inviting investors for the next bidding, Psalm might want to negotiate long-term power supply contracts with the Manila Electric Co. (Meralco) and other big distributors/users to boost the value of Masinloc and other plants on sale.

This was the same value-added that Malaysian firm Ranhill Berhad was eyeing when it agreed with YNN boss Sunny T. Sun to buy out YNN and take over its winning bid.

Adding such a supply side contract to Masinloc could allay the fearful question asked earlier by Psalm people if anybody aside from Ranhill would dare to bid next time after the YNN bid is cancelled.

They had reason to be worried, because in that last bidding - without a power supply contract with Meralco – only two bidders, both with close relations to the Lopezes, participated. * * *
MERALCO LESSONS: It is interesting that before the bidding, Psalm dashed hopes that a supply contract could be attached to Masinloc when it said talks between Napocor and Meralco for such an agreement were "going nowhere."

Why did Meralco change its mind over the last few weeks when it confirmed before the Philippine Stock Exchange that it was negotiating a supply contract?

The answer may be found in the reported offer by the government to condone Meralco’s P20-billion debt to Napocor and at the same time grant its rate increase application.

Meralco and the Energy Regulatory Commission may also learn a lesson or two from this experience.

For Meralco, it should be more circumspect in choosing its business partners. It should stay away from known slick operators. It is already suffering from credibility problems and its involvement in this kind of controversy has further tainted its image. * * *
RANHILL CARD: If Meralco, however, is deeply involved with Sunny Sun, as is the common impression, then we could expect more similar stealthy deals in the future.

During the last few months when everyone was speculating on whether a supply contract was being negotiated by YNN with the power distribution firm, Meralco kept its silence until it was forced to say something by the PSE.

The speculation was raised by the sudden entry of Ranhill Berhad into YNN in the early part of April 2006 demanding that a supply contract be first attached to the Masinloc deal.

A few days later, the ERC issued Resolution No. 21 which suspended the need for a public bidding for all supply contracts entered into. Eyebrows were raised when it was discovered that ERC Commissioner Jesus Alcordo, a close business partner of Sunny Sun, was one of the signatories of the resolution.

Sources have claimed that the resolution was issued to enable Meralco and YNN to enter into a sweetheart deal for a supply contract. But it would be made at the expense of Meralco consumers because it would result in increases in electricity rates.

No comments: