MASINLOC: Energy execs worried too
ENERGY officials have started to take seriously the concerns aired by legislators, power industry players and consumers about the sale of the 600-megawatt Masinloc power plant to a company of questionable background. Energy Secretary Raphael Lotilla said they will declare the $14 million performance bond of the plant buyer, YNN Pacific Consortium, forfeited in favor of the government if it cannot pay the $227 million upfront fee (40 percent of the $561 million winning bid price) by June 30 this year.
More than two years after the bidding for the Masinloc plant, YNN Pacific has not paid a single centavo of its financial obligation to the government. It reneged on the payment of the upfront fee on or before Dec. 20, 2005, and failed again to honor its obligation when the deadline was extended to March 31, 2005.
Since the government is beginning to look more and more like a victim in a high-stakes con game, industry watchers are tempted to describe the privatization of Masinloc plant as the most scandalous deal in the power sector since the $2.1 billion Bataan nuclear power plant mega-scam of the authoritarian Marcos era.
In an ironic twist, officials of the Power Sector Assets and Liabilities Management (Psalm) Corp. were found to have awarded themselves a P10 million bonus in recognition of their efforts in the sale of Masinloc and five other power plants. But they were rebuffed by the Commission on Audit, which disallowed the cash bonanza. CoA auditors were unimpressed at their supposed exceptional feat in carrying out the privatization program after seeing that none of the promised millions of dollars from the winning bidder of Masinloc plant has yet to be seen.
With the continuation of the purchase agreement between YNN Consortium and Psalm becoming more problematic and indefensible, owners of the troubled firm, and its “godfathers” or partners in government, seem to be moving heaven and earth to save the power deal.
To make the operations of YNN Pacific viable, it should secure contracts with utility firms that will buy the power generated by the power plant in Masinloc, Zambales. But what is this we heard about deceitful moves by the company to pave the way for the signing of a supply contract with the Manila Electric Company (Meralco)?
Last Dec. 22, 2005, the Energy Regulatory Commission issued guidelines requiring distribution utilities to certify that they have conducted public bidding in the procurement of new power supply contracts with generation firms. Nothing wrong with that. In fact, the ERC deserves to be commended for imposing that requirement since it will make the process transparent and protect the interests of consumers.
The normal course of events at the ERC, however, took a bizarre twist several weeks ago when they suddenly and unexpectedly decided to suspend the guidelines requiring public bidding. This was done through Resolution 21 issued May 10, 2006. In issuing the resolution, the ERC came up with the lame excuse that the guidelines for transparent public bidding were being temporarily shelved because no public hearings were conducted on them. But this was instantly seen by people in the know as a not-too-subtle move to allow YNN Pacific to forge a sweetheart supply contract with Meralco.
Among the ERC officials who signed the infamous resolution is Commissioner Jesus Alcordo, who has become the cynosure of all eyes. Why? Because it is an open secret in the power industry that Alcordo is a business partner of Sunny Sun, principal owner of YNN Pacific.
The local shareholder of YNN Pacific is YNN Holdings Corp., which is owned by Sun who also happens to be a distributor of Duraflex Wires and Cables. Duraflex sells its products to power utilities like Meralco. YNN Holdings Corp. also happens to be the 60-percent owner of Duracom Mobile Power Corp., which operates a 108-megawatt power barge in Navotas selling electricity to Meralco. His partner in Duracom is East Asia Power Resources Corp., owned in turn by the now bankrupt American company El Paso Energy. At the time the partnership was inked in 1993, the president and part owner of Best Asia Philippine operations was none other than Alcordo.
Several years ago, Senator Juan Ponce Enrile exposed documents showing the Alcordo company, East Asia Power, paid out $3 million in “success fees” to Sunny Sun’s YNN Holdings Corp. to obtain a Meralco contract for his East Asia power barge in Navotas. Today, those power barges continue to pay a commission of sorts to Sun, which Enrile estimates to be at 15-21 centavos per kilowatt hour, or roughly P200 million a year.
Alcordo may have denied that he is taking advantage of his post as ERC commissioner to help his friend Sun, but his claim seems to be contradicted by facts. For instance, Duracom applied for and was granted a 20-percent increase in tariff rates by the ERC in January 2004. This effectively gave Duracom an additional P20 million revenue per month.
If Psalm bothered to check how Sunny Sun runs his businesses, it would have had second thoughts on awarding him the Masinloc contract. Our informant says his power firm Duracom has billions of pesos in loans that have been left unpaid, and therefore needs restructuring. The company is classified as financially distressed and yet his creditors complain of massive amounts running into hundreds of millions of pesos each year being paid via his holding company YNN Holdings Corp. in the form of “marketing fees.”
MANILA STANDARD
More than two years after the bidding for the Masinloc plant, YNN Pacific has not paid a single centavo of its financial obligation to the government. It reneged on the payment of the upfront fee on or before Dec. 20, 2005, and failed again to honor its obligation when the deadline was extended to March 31, 2005.
Since the government is beginning to look more and more like a victim in a high-stakes con game, industry watchers are tempted to describe the privatization of Masinloc plant as the most scandalous deal in the power sector since the $2.1 billion Bataan nuclear power plant mega-scam of the authoritarian Marcos era.
In an ironic twist, officials of the Power Sector Assets and Liabilities Management (Psalm) Corp. were found to have awarded themselves a P10 million bonus in recognition of their efforts in the sale of Masinloc and five other power plants. But they were rebuffed by the Commission on Audit, which disallowed the cash bonanza. CoA auditors were unimpressed at their supposed exceptional feat in carrying out the privatization program after seeing that none of the promised millions of dollars from the winning bidder of Masinloc plant has yet to be seen.
With the continuation of the purchase agreement between YNN Consortium and Psalm becoming more problematic and indefensible, owners of the troubled firm, and its “godfathers” or partners in government, seem to be moving heaven and earth to save the power deal.
To make the operations of YNN Pacific viable, it should secure contracts with utility firms that will buy the power generated by the power plant in Masinloc, Zambales. But what is this we heard about deceitful moves by the company to pave the way for the signing of a supply contract with the Manila Electric Company (Meralco)?
Last Dec. 22, 2005, the Energy Regulatory Commission issued guidelines requiring distribution utilities to certify that they have conducted public bidding in the procurement of new power supply contracts with generation firms. Nothing wrong with that. In fact, the ERC deserves to be commended for imposing that requirement since it will make the process transparent and protect the interests of consumers.
The normal course of events at the ERC, however, took a bizarre twist several weeks ago when they suddenly and unexpectedly decided to suspend the guidelines requiring public bidding. This was done through Resolution 21 issued May 10, 2006. In issuing the resolution, the ERC came up with the lame excuse that the guidelines for transparent public bidding were being temporarily shelved because no public hearings were conducted on them. But this was instantly seen by people in the know as a not-too-subtle move to allow YNN Pacific to forge a sweetheart supply contract with Meralco.
Among the ERC officials who signed the infamous resolution is Commissioner Jesus Alcordo, who has become the cynosure of all eyes. Why? Because it is an open secret in the power industry that Alcordo is a business partner of Sunny Sun, principal owner of YNN Pacific.
The local shareholder of YNN Pacific is YNN Holdings Corp., which is owned by Sun who also happens to be a distributor of Duraflex Wires and Cables. Duraflex sells its products to power utilities like Meralco. YNN Holdings Corp. also happens to be the 60-percent owner of Duracom Mobile Power Corp., which operates a 108-megawatt power barge in Navotas selling electricity to Meralco. His partner in Duracom is East Asia Power Resources Corp., owned in turn by the now bankrupt American company El Paso Energy. At the time the partnership was inked in 1993, the president and part owner of Best Asia Philippine operations was none other than Alcordo.
Several years ago, Senator Juan Ponce Enrile exposed documents showing the Alcordo company, East Asia Power, paid out $3 million in “success fees” to Sunny Sun’s YNN Holdings Corp. to obtain a Meralco contract for his East Asia power barge in Navotas. Today, those power barges continue to pay a commission of sorts to Sun, which Enrile estimates to be at 15-21 centavos per kilowatt hour, or roughly P200 million a year.
Alcordo may have denied that he is taking advantage of his post as ERC commissioner to help his friend Sun, but his claim seems to be contradicted by facts. For instance, Duracom applied for and was granted a 20-percent increase in tariff rates by the ERC in January 2004. This effectively gave Duracom an additional P20 million revenue per month.
If Psalm bothered to check how Sunny Sun runs his businesses, it would have had second thoughts on awarding him the Masinloc contract. Our informant says his power firm Duracom has billions of pesos in loans that have been left unpaid, and therefore needs restructuring. The company is classified as financially distressed and yet his creditors complain of massive amounts running into hundreds of millions of pesos each year being paid via his holding company YNN Holdings Corp. in the form of “marketing fees.”
MANILA STANDARD
posted by OlongapoCity Zambales at
8:07 PM
0 Comments:
Post a Comment
<< Home