The History of the Sale of Masinloc Power Plant
Back when I was still working for the Senate Committee on Energy, it was around the early half of 2005. The issue on the sale of Masinloc Power Plant in Zambales exploded when the winning bidder, YNN Pacific Consortium, was found out to be under-capitalize, no experience in power industry, incorporated only around 4 months before the bidding, and according to Joker Arroyo then, to specific office (the company staying in the listed address in SEC was a manpower services office). In short, at that time YNN seemed to be a “fly by night company”.
There are lots of speculations emerged during that time, even at the committee hearings. Some speculated that the Lopez Group was behind that issue, since one of the officers of the YNN was a former officer of Duracom, one of MERALCO IPP’s; and why First Gen’s bid (the 2nd bidder) was very far from the bid price of YNN?
“In December 2004, First Gen submitted a bid of $274.85 million while YNN Pacific’s winning bid was $561.74 million.” - The Philippine Star, 07/06/2006.
Some were concerned on how YNN could pay the balance of their payment since they are under capitalize and yet have no stable foreign partner. Also, how YNN could run a 600 MW coal plant if they have no experience in power industry.
The mode of payment of YNN, which is a deferred payment (40% down payment and the remaining balance is payable for 15 years with certain interest), was also questioned since the money from the sale of NPC assets is badly needed to pay its debt. That is, no time to wait for additional 15 years to collect the payment for the balance.
Rafael Lotilla, the PSALM President at that time, hardly defended their decision on the sale of Masinloc.
Then, almost one and a half year has passed, I saw this news article in the internet,
“The 600-megawatt Masinloc coal-fired power facility, of which sale has been aborted because of the winning bidder’s failure to put up required downpayment is now attracting horde of prospective bidders should the Power Sector Assets and Liabilities Management Corporation (PSALM) set it on auction one more round.
However, the investors have one common concern that shall be considered by privatization implementers -that is for government to re-evaluate the reserve price. This is currently set at $ 388 million.
PSALM moved for the forfeiture of the $ 14-million bond deposit submitted by YNN and new partner Ranhill Power Berhad after the group failed to pay the required downpayment of $ 227.54 million on their June 30 deadline.” Manila Bulletin, July 4, 2006.
Wew, what a waste of time and opportunity?
Filed in: Philippine Electric Power Industry, Reforms/EPIRA
Local date: March, 2010
