$ 14-M bond for Masinloc tied to getting supply contract
Friday, May 12, 2006
By MYRNA M. VELASCO
The need to secure a supply contract with Manila Electric Company (Meralco) was reportedly stipulated as a pre-condition for the revised $ 14-million performance bond submitted by Malaysian firm Ranhill Power Berhad for the 600-megawatt Masinloc coal-fired power facility’s acquisition, to become valid.
If the acquiring entity fails to secure this muchneeded TSC with the giant utility firm, it was provided under the submitted document that the bond deposit will revert back to the original $ 11.2 million.
PSALM vice president for asset management Froilan A. Tampinco re-affirmed Ranhill’s submission of theamended performance bond; but he said the company has not officially accepted it yet.
"It has to go through the approval of the PSALM board, and we’re setting a meeting on the week of May 22nd to 26th," he said.
He would not directly confirm what were the conditions tied to the amended letter of credit thatwas submitted by Ranhill; but indicated that "these are being reviewed by our lawyers that would trigger acceptance or rejection of the bond."
While Masinloc is the first biggest asset auctioned off by PSALM in line with the privatization of the generation assets of the National Power Corporation; the process has been deeply enmeshed in controversies; setting aside yet the relentless delays in the settlement of the upfront cash payment.
It is common knowledge that PSALM already allowed two deadline extensions to winning bidder YN Pacific Holdings just to comply with the required upfront payment for the asset’s turnover. Ranhill Power is YNN’s newly-recruited partner in the purchase of the Masinloc asset.
The first installment was initially fixed at $ 224 million; but this has been raised to $ 227 million after PSALM imposed $ 3 million interest charge for the deferred due date of payment.
YNN’s winning bid price was $ 561.74; and the asset sale agreement prescribes that this be settled over seven years with corresponding interest charges.
With the entry of Ranhill into the deal, ABNAMRO has been tapped to lead arrange the loan procurement for the downpayment due by June 30 this year.
After that have been consummated, PSALM president Nieves L. Osorio noted that the Asian Development Bank (ADB) will be pursuing equity investment into the facility and will help put up cash for the next batch of payments. The sweetener, it was stressed, hinged on prospects that the investors can set capacity expansion of the plant by another 300 megawatts.
Technical evaluation of the asset has shown that there is a potential to build a third unit; which means that Masinloc’s installed capacity can go as high as 900 megawatts.
The plant currently has two units with 300-MW of installed capacity each; and the expansion could be atanother 300-MWs. The facility’s useful life can also be as long as 50 years.
It has been emphasized that if the new owners of the facility would decide to expand, this would providethem some "economy of scale" because it would save them from site provision and right-of-way clearances,thus, resulting in lower investment cost.
The plant, it was noted, has high availability and reliability as measured by its relatively low forced outage rate of 1.20 percent and 2.20 percent in 2001 and 2002.
Due to lack of transmission constraints, it is also expected that the plant would be dispatched at itsfull load to the Luzon grid. (MMV)
posted by philpower @ 5:10 PM,
