Masinloc power plant buy
Saturday, July 01, 2006
YNN-Ranhill fails to make down payment
By MYRNA M. VELASCO
While the entire power industry was guessing if government will bend to another extension, it was confirmed that winning bidder YNN Pacific Holdings and Malaysian firm partner Ranhill Power Berhad were not able to submit the required $ 227.54 million down payment for the 600-megawatt Masinloc coal-fired power facility yesterday.
As of press time, the Power Sector Assets and Liabilities Management Corporation (PSALM) was tight-lipped over media queries if they would have to get ahead with the forfeiture of the $ 14 million performance bond posted as a guarantee to YNN-Ranhill’s commitment to comply with its commitment under the asset purchase agreement.
The government though was weighing if extension could still be afforded as they raised fears that if they would rebid, PSALM might not be able to fetch the $ 561.74-million purchase price offer of the original winning bidder.
It was gathered though that the lenders being tapped by Ranhill flew in to the country and held meeting with PSALM officials around 3 p.m. yesterday. They have also visited the Wholesale Electricity Spot Market (WESM) to assess its viability as alternative market for Masinloc’s electricity output.
Ranhill tapped ABNAMRO as lead arranger, advisor and sole bookrunner in raising the initial funds it needs; and to be backed up by its balance sheet.
In an interview, Ranhill chief executive officer Wong Keng Cheong stressed that they are committed on the Masinloc facility but noted that there are conditions they would have to meet before the creditors would extend cash for the asset’s purchase.
The Malaysian firm negotiated for a 10-year power supply agreement with utility firm Manila Electric Company (Meralco) but signing prospects bogged down when the Energy Regulatory Commission (ERC) rendered a ruling setting forth new policy on pricing electricity traded via the WESM.
PSALM president Nieves L. Osorio gave word that she will need to wait until deadline time of until 12 midnight before coming up with any official statement.
News also circulated that President Arroyo instructed Executive Secretary Eduardo Ermita on Ranhill bond’s forfeiture; noting that this is the last resort the government could turn to if they cannot put up the mandated 40percent upfront cash payment to merit the asset’s turnover.
Presidential chief of staff Michael Defensor, on the other hand, opined that extending Ranhill’s deadline would eventually turn out more beneficial since this thrives as an assurance that the facility would be disposed of at a higher price.
The patience of other prospective investors though have been wearing thin, noting that the flipflopping attitude of government is a concrete manifestation that they cannot keep up with their own rules for the privatization of the National Power Corporation (NPC) assets.
In an interview, Joint Congressional Power Commission (JCPC) co-chairman Alipio Cirilo V. Badelles noted that he would prefer a re-bidding process for the asset.
"If we re-bid, we can get out of the mess that the Masinloc privatization process has gotten into. That would allow every party to start on a clean slate.
PSALM should move to forfeit the bond deposit," he stressed.
On March 31 this year, PSALM allowed a threemonth extension on the deadline for winning bidder YNN but on condition that its bond deposit would be increased by $ 3.0 million from $ 11.2 million.
The breakdown of the $ 227.54 million covering the 40-percent down payment would include advance rentals of $ 4.0 million and option price of $ 740,000.
Ranhill reportedly considered to take equity in the Masinloc deal as they see prospect of expanding the plant by another 300 megawatts; to be set on stream at the expected close of demand-supply gap by 2010.
Ranhill Power is already an entrenched electricity generation player in Malaysia for an initial 120MW capacity, targeting expansion up to 380 MW, for a supply agreement it has with a utility in Sabah. It is also expanding operations overseas, primarily in Pakistan. (MMV)
posted by philpower @ 11:20 AM,
