POSTSCRIPT / June 25, 2006 / Sunday


Philippine STAR Columnist

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Ranhill itself discloses ugly plans on Masinloc

FOOTNOTE: Last June 4, Postscript said, “It has happened too often in this Strong Republic that an investor bids for a big government project, wins it, then tarries paying and mobilizing.

“The winner cannot or does not pay on time, because (1) he does not have the money up front, (2) is still looking for financier-partners, (3) is trying to pre-sell the contract at a profit, or (4) is negotiating an amendment to fatten the contract before paying.

“xxx Before the bidding starts, the ground rules or the terms of reference are made known to, and made binding on, all parties. If the rules are followed, and they should be, everything is supposed to proceed without any hitch, like clockwork.”

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RIP-OFF: But the more I study the “sale” of the 600-megawatt electric plant in Masinloc, Zambales, to a company that has neither track record in power generation nor the capacity to pay, the more I am convinced that the government has been a willing victim, if not a conspirator, in a rip-off.

The more skeptical among us would even say the sordid transaction has the blessings, if not the encouragement, of Malacañang no less. A sale of this magnitude (winning bid was $561.74 million) cannot pass the checkpoint by the Pasig without its green light.

The Palace cannot pretend not to have noticed this high-profile transaction. The studied silence in the office of the President reverberates with millions of, huh, decibels.

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RANHILL PAPER: The Malaysian firm Ranhill Berhad itself said in its most recent disclosure to the Malaysia Stock Exchange that it was completely buying out YNN Pacific Consortium, the local firm that won the Masinloc bidding.

It also disclosed that it has agreed to pay the $227.54-million down payment that YNN failed to pay despite the lapse of two deadlines already. The last deadline is June 30, 2006, but there is word in the industry that even this would be extended again.

Ranhill takes over YNN by buying the 25,000 common shares of all YNN stockholders led by businessman Sunny T. Sun whose belatedly paid-up (only this month) shares of stock is valued at P2.5 million.

Note that when YNN won with its $561.74-million bid, its paid-up capital was reportedly only P625,000! Wow! Double wow!!

Ranhill, basically a consultancy firm with only a 120-megawatt power plant to its name, would not dig into its own pocket. It said it would borrow from some bank the $227.54 million to enable YNN to pay the overdue down payment.

Its buying into YNN would not be done directly. Ranhill said it planned to use a Netherlands-based holding company named Moretta Finance BV that it would own 100 percent. Why the round-about route? What is it hiding?

* * *

MERALCO DEAL: I am sure Malacañang has all the documents on this Ranhill official disclosure, and more. There is no need for me to lend them my copy.

Malacañang must also be aware that Ranhill has said that it would part with its money, including the bulk to be borrowed from the bank, only if YNN signs a contract with the Manila Electric Co. (Meralco) for the power-distribution firm to buy electricity from it.

Siempre segurista rin ang mga iyan! So do not be surprised by reports that Malacañang is now pressuring the Meralco board, where it has a good number of directors, to hurry up with that supply contact.

With all this open admission indicating bad faith on the part of YNN when it bid for Masinloc, why is Malacanang acquiescing to the deal and the coddling of YNN?

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WINDFALL: For $8 million, Ranhill said it would acquire/subscribe to all the common and new shares of YNN and its partner, Qinfa, and assume all its obligations under the Masinloc sale, including paying its $561.74-million bid price.

For a firm that has not spent a single cent for the bidding of Masinloc, the $8 million it is set to receive from Ranhill is indeed a huge trophy for YNN’s effective use of connections.

The proposed takeover by Ranhill tends to show that YNN is merely a peddler/broker — not a bonafide bidder or an (electric) power generator.

It submitted a scandalously high bid to make sure it bagged the contract, apparently with the intention of selling its rights under the bid contract to a willing firm before the deadline expires.

It is assumed that YNN was forced to ask for deadline extensions for its first payment because at that time, it has yet to find a firm to take over its rights to the Masinloc contract. Now it has found its knight in shining armor in Ranhill Berhad.

Who will benefit from the $8 million that YNN stands to gain? Never mind if industry sources say the actual amount involved is closer to $12 million.

* * *

APPLY THE LAW: Sen. Aquilino “Nene” Pimentel III said that the only way for the government to redeem itself on the issue is to finally do the right thing — apply the law on failed biddings, cancel the YNN agreement and forfeit its $14.4-million bond.

The senator is right. The government, through the Power Sector Assets and Liabilities Management Corp. (Psalm) should have cancelled the sale and forfeited the bond in November 2005, the first deadline under the bid terms.

But the Psalm acted favorably on YNN’s requests as if it was protecting its or somebody’s interest and not that of the government. It agreed to extend the deadline not just once but twice. With the third deadline, June 30, just around the corner, another extension looms.

All these extensions were granted, mind you, with the defaulting bidder even imposing conditions before it pays up! Malakas talaga!

* * *

CONSPIRACY: Is Psalm, or somebody big above it, part of the conspiracy?

First, Psalm awarded Masinloc to YNN without first ascertaining its financial and technical qualifications (it was incorporated four months before the bidding with a paid-up capital of only P625,000).

Second, YNN was given nine months after it won the bidding to pay 40 percent of the bid price (until now it is not paid), with the balance payable within seven years.

Third, Psalm kept extending the deadline for the first partial payment while YNN shopped around for investors or financiers willing to buy it out. Kung walang pera, bakit binayaang mag-bid?

Fourth, Psalm or somebody above it is reportedly pressuring Meralco to sign a supply contract with YNN, a condition imposed by Ranhill when it agreed to the $11.2-million performance bond being raised to $14 million.

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NOT IN THE TERMS: Industry sources said that YNN-Ranhill is gaining the upper hand in its bid to obtain a supply contract with Meralco.

Ranhill disclosures themselves indicate that negotiations are in the advanced stages of securing the Power Sales Agreement with Meralco for an initial term of 10 years.

A supply contract is not in the terms of reference of the Masinloc sale, because it was bid out as a merchant power plant that does not hold any long-term power purchase agreement with any power distribution firm.

It is obvious that YNN could not have progressed in its negotiation with Meralco if not for the assistance of the Energy Regulatory Commission, which suspended through its Resolution No. 21 the public bidding requirement for all power supply contracts.

It might look coincidental, but the fact is that one of the commissioners who signed the resolution was Jesus Alcordo, once a close business partner of Sunny Sun, owner of YNN.

* * *

RATE HIKE COMING: Bayan Muna Secretary-General Renato Reyes Jr. cited industry reports that in exchange for signing the supply contract, Meralco would be granted by the ERC a rate increase and a favorable resolution of its P20-billion settlement case with the National Power Corp.

He noted that the ERC scheduled a hearing for a Meralco rate increase petition this June 27, just three days before the deadline for the YNN payment of the upfront fee.

It is unusual that Meralco has not issued any statement regarding talks it has with YNN-Ranhill. Is it being pressured or is it part of a conspiracy to protect common interests?

The move of the Bayan Muna to file graft charges against several energy officials is a welcome move, if only to force a full disclosure on the YNN-Masinloc deal.

* * *

PROBE DUE: Senator Pimentel insists that Ranhill’s takeover of YNN and Masinloc should not be allowed without the company being looked into by the Joint Congressional Power Commission.

He said the proposal to take over YNN and Masinloc, the most valuable among Napocor plants being bid out, should be treated as a new offer subject to the scrutiny of the JCPC in terms of its financial capability, technical expertise and overall qualification.

If only for transparency’s sake, Psalm should not just take Ranhill’s proposal hook, line and sinker, he said, without first determining its qualifications as what is required in all sales of government assets.

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(First published in the Philippine STAR of June 25, 2006)

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