World Bank scores PSALM for delay in Napocor privatization
Friday, December 10, 2004
By Donnabelle L. GatdulaThe Philippine Star 12/10/2004
The World Bank (WB) has blamed is blaming the Power Sector Assets and Liabilities Management Corp. (PSALM) for the delay in the privatization of the National Power Corp.’s (Napocor) assets. "We are waiting for PSALM’s financial statement," WB country manager Joachim von Amsberg said in a press conference yesterday.
The financial statement is crucial in evaluating the capability of PSALM and the government to pay up the huge debts of Napocor. PSALM is the state entity created by the Electric Power Industry Reform Act of (EPIRA) 2001 to handle the finances and privatization of Napocor.
"Once we have it, we will do our best to analyze it" Amsberg said, noting the importance of the transfer of the assets to the privatization of Napocor. "We are working with Energy Secretary Vincent Perez to help advance the development of the power sector in the Philippines."
In a separate press conference, PSALM president Raphael Lotilla admitted that the multilateral creditors of Napocor have yet to give their go-signal for the transfer of the assets which, in turn, prevents PSALM from closing the contracts with the winning bidders of Napocor's recently sold power plants.
Lotilla said without the closure of the contracts, PSALM would not be able to collect the upfront cash from these winning bidders. "The World Bank, JBIC and, Asian Development Bank are still withholding their consent for the asset transfer.
We need to get that consent before we have closure," Lotilla said. But the PSALM chief has expressed confidence that the privatization of the 600-megawatt (MW) Masinloc coal-fired power plant, which was sold for $561.7 million, will be successfully concluded and that government interest remains sufficiently protected.
As part of its post-bidding procedures, PSALM is currently validating and confirming the documentary submissions of the highest bidder for Masinloc-the Australian-led YNN Pacific Consortium Inc. "Every Filipino has an interest in the successful close of this transaction.
YNN Pacific Consortium has committed to pay a good price for a valuable asset. It is the first major investor following the passage of EPIRA and government is not providing it a long-term supply contract to provide security for its investment. We should cheer on the YNN consortium, wish it every success, for its success will provide true momentum to our power privatization process,"
Lotilla said. The highest bidder was required to post a performance bond in the amount of $9 million in the form of an irrevocable standby letter of credit issued by a reputable international bank confirmed by its local branch in the Philippines.
In the event that the highest bidder is unable to pay the $224.7-million upfront fee representing 40 percent of the bid price, the government will forfeit the performance bond and re-bid the asset. But the asset will not go to the second highest bidder, which is First Generation Holdings of the Lopez group, as the latter failed to meet the minimum or reserve price.
Pursuant to the President Arroyo’s instructions, a reserve price is set by the PSALM board in order to ensure that Napocor’s assets are not sold at bargain- basement prices. "As the Masinloc plant is a new and efficient plant, PSALM continues to receive strong interest in acquiring the plant should the successful bidder fail, for any reason, to proceed with the deal.
This is despite the fact that Masinloc was offered without an attached supply contract," he said. The PSALM official said they are committed to pursue the government’s privatization program in the power sector in order to ensure a steady power supply for the people at competitive rates in the medium- and long-term and to help reduce the country’s fiscal deficit.
"We need to help each other here. We can’t proceed unless they approve this transfer. It is vital to get the banks acceptance to effect the closure of the asset," Lotilla added. The Filipino-Australian consortium bagged Masinloc in the most anticipated bidding held by the government so far since it began selling off its power assets in March this year.
posted by philpower @ 9:19 AM,
