PSALM receives YNN’s $ 14-M performance bond
Friday, May 26, 2006
By MYRNA M. VELASCO
The amended $ 14-million performance bond by partners YNN Pacific Holdings and Malaysian firm Ranhill Power Bhd for the 600-megawatt Masinloc coal-fired power facility was finally accepted by the Power Sector Assets and Liabilities Management Corporation, but concurred to without conditions.
PSALM has confirmed earlier reports that "YNN tried to request for the inclusion of a bilateral power supply contract as an additional condition", but this was turned down flat out by the government.
"We did not agree to this since this is contrary to the terms of the Asset Purchase Agreement between YNN and PSALM," said company vice president for asset management and electricity trading group Froilan A. Tampinco.
It had become a circulated news in energy circles that the amended letter of credit (L/C) submitted by the asset purchasers were set with a condition for a transition supply contract (TSC), primarily with giant utility firm Manila Electric Company (Meralco).
In previous statements, PSALM has not totally debunked that it is helping YNN-Ranhill to get a supply contract but company officials noted that this does not necessarily mean that it had been an offered pre-requisite to the deal.
The increased performance bond from $ 11.2 million was imposed and made contingent upon PSALM’s decision to extend the deadline of the buyers from March 31 to June 30 this year.
At this stage, Tampinco noted that "PSALM now possesses the acceptable performance bond."
As discussions were ongoing, he added that "the original $ 11-million bond remained effective and in PSALM’s possession so the government’s interest was amply protected."
With this initial new milestone, government is gaining added confidence that the Masinloc deal would finally make it to the finish line, with the hope that YNN-Ran-hill would be able to bring in the needed 7 million upfront payment by deadline time.
"It is still in the best interest of the government that PSALM give this transaction as much leeway to succeed," the company official averred.
Given the hurdles they have been facing with respect to the privatization of the National Power Corporation’s generation assets, PSALM is forthright in admitting that "the bid of YNN is one that is difficult to duplicate" should they decide to call for a rebidding.
The deadline extension, officials said, is the best alternative they can adopt; noting that the purchase offer is seen eventually bringing more benefits for the government in terms of maximizing proceeds from NPC’s asset divestment.
"By just granting a few months extension, PSALM is simply mindful of its EPIRA-mandate to maximize proceeds for the government," Tampinco said.
posted by philpower @ 8:59 AM,
