POSTSCRIPT / June 29, 2006 / Thursday


Philippine STAR Columnist

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Palace voiding Masinloc deal, orders new bidding

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 an 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.

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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?

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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.

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OVEREAGER: All this confusion about what Pope Benedict XVI actually said, and meant, when President Arroyo called on him at the Vatican and explained a few delicate Philippine issues would have been avoided had she and her spokesmen exercised a little discretion.

The usual practice in such high-level meetings, precisely to avoid ambiguities and misinterpretations, is for the two sides to issue a joint statement. If none is issued, both sides are expected to exercise utmost restraint, especially on matters liable to misinterpretation.

If only in deference to the Holy Father, President Arroyo or whoever presumed to talk for her should have said only pleasant general statements when asked about the substance of the private meeting.

But, no, the President and her chorus were obviously overeager to use her audience with the Pope as a springboard for gaining political points on the home front. Bad taste.

Talking first on delicate diplomatic issues and clarifying later is reckless imprudence.

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PREMATURE TALK: Even before the President left on the first leg of her three-state European trip, I noticed her being too forward.

In Manila, she announced without provocation that she was going to invite the Pope to visit. Unilateral announcements of an intention that could bind or cramp the style of a friendly foreign sovereign are a no-no.

Has the Pope been officially invited and has he accepted? If so, let the Pope say it, or let the two sides simultaneously announce it. A premature announcement could lead to awkward situations. What if the Pope decides not to visit?

Also, when heads of government (or even lower officials) meet, they usually invite one another as a matter of form. And if the opposite number says yes (he has to say yes if only out of courtesy), that is no big deal. The big deal is when the written invitation and acceptance are exchanged and preparations for a visit actually start.

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WHAT’S A LEG?: If I may digress, again — sorry, but I feel compelled to speak up when I read media reports referring to the Vatican as the “first leg” of the President’s trip.

I have been taught that the first leg in a case like this is not the Vatican, but the Manila-Vatican line. A “leg” is not a point on the map, but a line. You can imagine what I am saying if you connect on the map the successive points/stops on the itinerary until the President is back in Manila.

Every line connecting two points on the map is a leg, as in the leg of triangle or the sides of a closed polygon. A point, like the Vatican, is not a leg. The leg here is the line connecting the Vatican with the previous or the next stop on the itinerary.

The legs come in succession (first, second, third… nth leg) as the traveler moves on from point to point until he/she closes the polygon upon his/her return. This is assuming he/she is able to return. Unlike DHL delivery men, some fail to make it back.

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ROMUALDEZ MOVE: The Romualdezes are not taking lying down the moves to unseat, block out or at least to embarrass them in the titanic power struggle ongoing at the Equitable PCIBank.

Trans Middle East (Philippines) Equities Inc., the Romualdez holding company, has asked the Supreme Court to direct the EPCIB board of directors to obey the tribunal’s order last June 9 restoring Ferdinand Martin G. Romualdez, TMEE representative in the bank, to the position of board vice chairman and to other key posts.

In a previous pleading, TMEE said that it has 51,827,640 shares, equivalent to 7.13 percent of the outstanding capital stock of the bank.

The company noted that while EPCIB chairman Corazon dela Paz and EPCIB corporate secretary Sabino E. Acut Jr. informed pertinent parties last June 16 that Romualdez is recognized as a duly-elected board member with full rights and privileges, he was not present at the organizational meeting held by the new board right after the May 23 stockholders meeting.

Romualdez was, therefore, not included among the appointed corporate officers and members of the previous board committees, according to the TMEE pleading.

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PRIOR POSTS: Before that stockholders meeting where TMEE was not allowed to vote its shares, Romualdez, was vice chairman of the EPCIB board, along with Winston Garcia, representative of the Government Service Insurance System, and Teresita Sy-Coson, representative of the Sy/BDO (Banco de Oro) Group in the new EPCIB board, the TMEE said.

In the new board, there are only two vice chairmen — Garcia and Coson, daughter of real estate and retail-based taipan Henry Sy whose personal net worth was placed by Forbes magazine at $1.5 billion last year.

The TMEE said that Romualdez would be in a better position to play his role as minority representative on the board and as member of important committees if restored to the positions he held before the May 23 board organizational meeting.

EPCIB is the country’s third largest bank with assets of P326.2 billion, deposits of P208 billion, and net loans of P138.8 billion as of end-2005.

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(First published in the Philippine STAR of June 29, 2006)

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