Govt rejects Masinloc sale to Lopez company
Thursday, July 06, 2006
By Alena Mae S. Flores
The government yesterday that it is not open to a negotiated sale with Lopez-owned First Gen Corp. following if the government fails to sell the 600-megawatt Masinloc coal-fired power plant to the YNN Pacific-Ranhill Berhad consortium.
Energy Secretary Raphael Lotilla told reporters that FirstGen’s bid fell short of the reserve or minimum bid price.
FirstGen is the only other bidder of Masinloc during the December 2004 bidding.
First Gen offered $274.85 million, lower than the bid of YNN Pacific of $561.74 million and 30 percent below the government’s reserve price of $388 million.
“Their bid is way below the reserve price,” Lotilla said.
He said the PSALM board, of which he is a member, was still “studying” what options to take although the government earlier agreed to bid out Masinloc “at the appropriate time if conditions warrant.”
Lotilla added that PSALM had received the $14 million bond forfeited by the YNN-Ranhill consortium. The performance bond was released to PSALM by the Malayan Banking Berhad Sentul Raya and confirmed by its local unit May Bank.
“The $14.14 million performance bond will form part of the privatization proceeds. It will be used partly to pay the deficit of [National Power Corp.],” he said.
Lotilla said the PSALM decided to call on the bond to protect the interest of the government.
He said the PSALM did not extend the June 30 deadline for the $227.54 million upfront payment as the 27 percent increase in the performance bond from $11 million to $14 million was already ample protection to the government.
“We wanted to ensure that the credibility of the privatization process is upheld,” Lotilla said.
On Monday, the PSALM board served a notice to the YNN-Ranhill consortium of the forfeiture of the bond for its failure to come up with the upfront payment last Friday.
Lotilla said the absence of a transition supply contract that would have assured YNN-Ranhill of a “ready market” for the coal plant’s output contributed to the failure of the Masinloc privatization.
He said up to now, PSALM was still waiting for Manila Electric Co. (Meralco), the country’s largest power distributor, to firm up a contract with National Power Corp.
posted by philpower @ 7:35 AM,
