Masinloc options readied

http://www.manilastandardtoday.com/?page=business01_aug07_2006

By Alena Mae S. Flores


YNN Pacific Holdings and partner Ranhill Berhad of Malaysia failed to come up with the $227.4 million down payment for the 600-megawatt Masinloc coal-fired power plant, Energy Secretary Raphael Lotilla said yesterday.

Lotilla, a member of the Power Sector Assets and Liabilities Management Corp. board, said the government did not receive payment from YNN-Ranhill as the asset purchase agreement officially lapsed yesterday.

Lotilla said he was informed that the consortium did not pursue the cash payment due to the lack of a supply contract for the Zambales power plant.

YNN-Ranhill was negotiating a supply contract with Manila Electric Co., the country’s largest power distributor, but the deal did not materialize.

The supply contract would have assured YNN-Ranhill of a captured market for the output of the coal-fired power plant.

Lotilla said PSALM would determine its next move, including a possible rebid. A new bidding, however, is not expected to fetch a higher bid price in the absence of a power supply contract.
PSALM announced last week that it would no longer accept an upfront payment from YNN-Ranhill after Aug. 6.

PSALM president Nieves Osorio said the company would not bend backward to accommodate YNN-Ranhill and accept the $227.4 million upfront payment.

“Our relationship with YNN will cease upon the effectivity of the termination notice on Aug. 6,” Osorio earlier said.

The 30-day notice of termination for the sale contract was on July 7.
Osorio said the sale of Masinloc was done in accordance with the mandate stipulated in Republic Act No. 9136, or the Electric Power Industry Reform Act, and the provisions stated in the bidding procedures and the transaction documents, which include the asset purchase agreement.

She said bid documents were submitted to the Commission on Audit before the bidding for the Masinloc power plant was conducted.

PSALM earlier seized the $14 million performance bond of YNN-Ranhill when the group failed to deliver the $227 million payment before the June 30 deadline.

YNN submitted the highest bid of $561.74 million for the Masinloc plant in December 2004.
The plant, considered one of the country’s biggest power assets to be privatized, was bid out a merchant plant, or without any power purchase agreement with any electric distributor or major electricity user attached to it.