Masinloc bidder fails to produce payment
Saturday, July 01, 2006
By Niel V. Mugas, Reporter
YNN Pacific Consortium is in a bind. Its possible new majority owner pushed back its planned entry to end-July, leaving the winning bidder for the Masinloc coal-fired power plant without the money to meet a Philippine government deadline for an upfront payment for the facility.
In a disclosure to the Malaysian Stock Exchange, Ranhill Berhad, the Kuala Lumpur-domiciled engineering company that had agreed to take a controlling interest in YNN Pacific, said the two parties agreed to extend negotiations for the acquisition of a 60 percent in the Philippine company.
Earlier, YNN Pacific and Ranhill agreed to pursue the first tranche of a share sale agreement (SSA) provided a supply contract with the Manila Electric Co. (Meralco), the Philippines’ biggest electricity distributor, is sealed on or before June 30 this year.
“On behalf of Ranhill’s Board of Directors, we wish to announce that the parties to the SSA have agreed to extend the 1st Tranche Conditions Deadline to July 31, 2006,” Ranhill said in its disclosure.
Without Ranhill’s resources, YNN Pacific is hard pressed coughing up the $227-million upfront payment for the Masinloc plant. This represents 40 percent of YNN Pacific’s $561-million bid price.
YNN Pacific, which won the bid last December, was supposed to deliver the upfront payment on March 30, but the consortium sought an extension after its Australian principals bailed out. The government agreed to move the deadline to June 30, but raised the performance bond to $14 million from $11 million previously.
Failure to produce the upfront payment would mean forfeiture of the performance bond in government’s favor.
Under the proposed SSA, Ranhill would assume responsibility for the upfront payment.
A source from the Power Sector Assets and Liabilities Management Corp. (Psalm), the agency tasked with selling the government’s power assets, said neither YNN Pacific nor Ranhill delivered the upfront payment.
The Manila Times tried to confirm this with Psalm president Nieves L. Osorio, but she refued to answer or return calls.
In earlier interviews, Osorio said the government is “ready to forfeit the bond if the situation calls for it” and that the agency will do whatever is legal.
YNN Pacific’s failure to produce the upfront payment has raised a howl among legislators who have called for a rebidding of the Masinloc facility. Furthermore, Psalm’s failure to close the deal has raised doubts about the progress of government’s power sector reform program.
Rep. Alipio Badelles, cochairman of the Joint Congressional Power Committee, wants Psalm to disclose the “steps it has undertaken to protect the interest of the country” in the Masinloc deal.
“Our official position is to forfeit if it [YNN Pacific] will not pay, and rebid [the plant],” the legislator said.
posted by philpower @ 11:13 AM,
