Palace voiding Masinloc deal, orders new bidding

POSTSCRIPT By Federico D. Pascual, Jr.
The Philippine Star

FRESH START: The controversial bidding for the 600-megawatt electric plant in Masinloc, Zambales, won by a company that has no track record in power generation and no capacity to pay would be cancelled.

A new bidding would be conducted, Executive Secretary Eduardo Ermita said in Malacañang yesterday as the June 30 deadline drew nearer for the winning bidder, YNN Pacific Consortium, to pay the $227.54-million down payment. It failed to beat previous deadlines.

Ermita was presumably talking on instructions of President Gloria Arroyo, who is on official visit to Spain (at the Vatican and in Italy earlier). Sources said that even while in Europe, the President was on top of Masinloc developments.

Unaware that the rug was being pulled from under them, YNN officials were reportedly negotiating yesterday with the Manila Electric Co. (Meralco) a power supply agreement to convince the Malaysian firm Ranhill Berhad it was profitable to rush to YNN’s financial rescue.

The come-on to Ranhill is that if it pays off all YNN obligations ($14.14-million performance bond, $227.54-million down payment, and the balance of the $561.74-million winning bid) and buys out YNN stockholders led by businessman Sunny T. Sun for $8 million, it would take over YNN and its Masinloc contract. * * *
MERALCO CONTRACT: But Ranhill wants to first sweeten the pot. It demanded that before it parts with its money, YNN must deliver by June 30 (tomorrow!) a 10-year Meralco contract that would assure Masinloc a ready buyer for its electricity.

But those are only YNN, Ranhill and Meralco talking. While this wheeling and dealing has been going-on, the Power Sector Assets and Liabilities Management Corp. (Psalm), which oversees Masinloc’s privatization, just looks on approvingly.

Ranhill has nothing to do with the Psalm-supervised bidding. The Malaysians are not a party to it, yet Psalm allowed them to insert themselves. It even leaned over backwards to accommodate their clear moves to grab Masinloc without benefit of a public bidding.

Why is Psalm unusually interested in opening the door to a non-bidder? Has it conveniently forgotten the terms of reference? Upon whose instructions has it been acting? How much money is involved here? * * *

DIRECT BIDDING: If the new bidding pushes through, YNN’s performance bond should be confiscated and Masinloc thrown open again to other interested investors – after the usual pre-qualification process so no adventurer or broker without money can participate.

Ranhill, which has offered to subsidize the cash-strapped YNN in a circuitous route to owning Masinloc, could now try to get the coveted generating asset on its own without having to buy out YNN for $8 million.

The Masinloc plant is considered the best among the generating assets of the National Power Corp. marked for privatization. It is a base-load pulverized coal-fired thermal power plant designed to use imported refined coal from Australia, China and Indonesia.

It has two generators, whose commercial operations began June 1998 with one of them going on line, followed by the other in December. Its plant life-cycle is 25 years.