NEW BIDDING REQUIRED TO ALLOW ENTRY OF MALAYSIAN
POWER FIRM INTO MASINLOC PLANT SALE

Senate Minority Leader Aquilino Nene Q. Pimentel, Jr. (PDP-Laban) today maintained that the government should revoke the sale of 600-megawatt Masinloc power plant to YNN Pacific Consortium for reneging on its payment of the $277 million upfront fee.

Pimentel said the purchase agreement between the Power Sector Assets and Liabilities Management (PSALM) Corp. and YNN Pacific should be voided despite the reported entry of the Malaysian power utility firm Ranhill Berhad into the consortium and its supposed plan to raise funds to settle the long-overdue financial obligation.

He said the YNN Pacifics performance bond originally amounting to $11.2 million and later increased to $14 million should be forfeited in favor of the government in accordance with the terms and conditions of the sale agreement.

YNN Pacifics agreement with PSALM should be cancelled and its bond should be confiscated, Pimentel said.

He also said a new bidding should be conducted since the frantic efforts of YNN Pacific to look for a new partner for the infusion of much-needed capital only confirmed the criticism that the winning bidder does not have the financial muscle or technical expertise to run the coal-fired plant in Masinloc, Zambales.

Ranhill Berhad should be treated as a new offer. If qualified, it should be taken seriously by PSALM. The law on failed bidding should be applied on the projected Masinloc Sale to YNN.

The minority leader said the hand of former President Fidel Ramos in the proposed entry of Ranhill Berhad should be carefully looked into by the Congressional Oversight Committee on Power before it gives the go-signal to the proposal.

Pimentel said other considerations should be imposed in the entry of any new investor so that the pollution emanating from the Masinloc operations are reduced or eliminated under the new management.

Also, he said provisions on the disposal of coal dust should be provided for in the new agreement.

In a statement, Ranhil Berhad said it will take over the YNN Consortium and it plans to raise more than $230 million to take control of the Masinloc facility.

The entry of Ranhil Berhad will supposedly enable the consortium to pay the $227 million up front fee before the expiration of the extended payment deadline on June 30, 2006.

The Masinloc facility, the biggest coal-fired plant of the National Power Corp., was awarded in a bid sale in December 2004 to YNN Pacific, composed of the Filipino firm YNN Holdings and Australias Great Pacific Financial Group.

YNN Pacific was given nine months to pay the upfront fee of $227 million (representing 40 percent of $561.7 million acquisition price). But when the consortium failed to pay the obligation on Dec. 31, 2005, the deadline was extended to June 30, 2006.

During the six-month extension, YNN Pacific reportedly negotiated with Ranhill Berhad to become its new investment partner.