It would be noted that the deadline time for YNN Pacific Consortium is just several days away to raise such amount of money; and even hurdled by the fact that its partner, the Australian firm Great Pacific Energy Ltd., is already on the verge of walking away.
PSALM did not divulge what conditions were asked by JBIC in its concurrence to the deal; and in a statement to media, it just quoted a portion in the letter of JBIC director Manabu Homma (dated October 28), that "after careful consideration of the request (of the Department of Energy, National Power and the Power Sector Assets and Liabilities Management Corp.) and in accordance with all existing loan agreements, we advise that Japan Bank for International Cooperation, for itself and on behalf of the lenders other than JBIC, hereby consents to the transfer of the ownership from the borrower (National Power) to the Power Sector Assets and Liabilities Management Corporation," with not much specific reference to the Masinloc asset.
It was culled from data earlier submitted by the Power Sector Assets and Liabilities Management Corporation (PSALM) to the Joint Congressional Power Commission (JCPC) that the targeted turnover date is around November 7, 2005; which means that it should be the same time frame when the winning bidder submits the upfront payment of $223 million out of the $561 million purchase price it offered.
But PSALM’s public pronouncement, via the media, is that the sale and turnover of the facility would have to be consummated before end of December this year; but it has never given any definite date on when this will be.
The reckoning date for the transaction should have been 270 days from the time that the sale was made effective; and the trigger for this would be based on the date when the notice of award was conferred to the winning bidder. As could be gleaned from earlier schedule set out by the Department of Finance, the validity date was December 22, 2004 when the NPC privatization committee chaired by the DOF sets the delivery of the notice of award that paved the way "for the completion of the documentation required to consummate the deal for the sale of the power plant."
"The JBIC, one of the major creditors of the National Power Corporation, has given its consent to the sale of the 600-megawatt Masinloc coal-fired thermal power plant located in Zambales, to finally complete the process of securing the consent of all National Power Corporation’s creditors which is required for the formal turnover of the plant to the winning bidder," PSALM said.
The company, however, has forgotten to qualify that the turnover of the asset would only consummated and validated after settlement of the required initial purchase price, which is equivalent to 40-percent of the winner’s bid price.
It has been emphasized that the basis of the upfront cash payment would be $557 million; because the total bid price of $561 million already factored in the land lease cost of $4.0 million.
Even with the remaining hurdles thrown into Masinloc’s privatization process, PSALM president Nieves L. Osorio noted that "the completion of the creditors’ consent to the sale of the Masinloc facility is a boost to the privatization efforts of the government as it will encourage investors to enter the Philippine power industry and help expand the ownership base of generation companies in the country."
What she forgot to mention, however, was that how the winning bidder would go about raising the money for its required first tranche of payment; given the time constraint.
And if the YNN consortium fails in complying with its mandate as the winning bidder, will the government invoke its claim to forfeit the posted $11 million security deposit; and how long will it take for them to decide on when a re-bidding of the asset takes place.
PSALM earlier made pronouncements that the facility will not be given to the second bidder; and that re-bidding would be the next best move that the government can resort to should the transaction bogged down.
