Clear-cut PSALM bidding terms sought
Monday, July 10, 2006
If it really wants to get serious in privatizing the assets of the National Power Corporation, prospective investors are putting forward cautionary advice to the Power Sector Assets and Liabilities Management Corporation (PSALM) that they first set clear bidding terms for the divested facilities.
Investors noted that they are tired of guessing what else PSALM would do to bend its own rules just so it can satisfy request for extension of some bidders who are not able to meet their deadlines to pay up.
Case in point is the 600-megawatt Masinloc coal-fired power facility wherein the entire power industry was baffled when it saw the agency in-charge of NPC’s privatization giving winning bidder de facto extension of 30 days even after the forfeiture of its .14 million performance bond.
Under normal circumstances, it was noted that bid bond forfeiture shall be executed once termination of contract with any party is already effected.
In its announcement last Friday, PSALM noted that it "served the notice of contract termination to YNN Pacific Consortium last July 7," but this gives the party a leeway to settle its required downpayment of 7.54 million until August 6 this year.
In a letter sent by PSALM president Nieves L. Osorio to YNN, she stated that "in accordance with the (Asset Purchase) Agreement, since YNN was not able to pay the upfront payment, rentals and option price to (PSALM) on or before June 30, 2006, we are hereby notifying YNN that PSALM is terminating the Agreement."
She added that the effective date of the termination of the agreement is August 6, 2006; and within those dates, YNN is not prevented to submit its upfront payment for the Masinloc asset.
While questions swirl though, PSALM is not giving any clear-cut policy statement on what it shall do with the confiscated bid bond once YNN pays its due before the termination date of the asset purchase deal.
PSALM’s penchant of constantly changing the bidding rules does not surprise the industry anymore; but if its disposition stays that way, it was opined that it will never move forward in privatizing the other NPC assets.
At this stage, the power industry is again keenly observing PSALM’s handling of the offer of 25-year concession contract for the National Transmission Corporation (TransCo); with its invitation for the submission of letter of intent (LOI) due by the middle of this month.
Prior to its announcement of bidding, PSALM was reprimanded by the Joint Congressional Power Commission (JCPC) for hastily modifying the bidding terms for TransCo just so it can accommodate what were deemed as "preferred" local investors.
PSALM went as far as proprosing that the government shall retain 15percent equity in TransCo so it readily bestow technical qualification to any local investor who may want to join the consortium to acquire the assets.
It was however emphasized by JCPC that such policy does not sit well with government, because this could mean opening the asset even to "fly-bynight" and inexperienced bidders; as talks are rife in power industry circles that pressures are being thrown to PSALM to lower the criteria for the bidders, "so that some Filipino investors positioning to become partners of foreign companies would not be disqualified."
posted by philpower @ 5:59 PM,
