Senators blame Napocor, PSALM 'treachery' for fiscal woes
Business World, January 6, 2005
By CARINA I. RONCESVALLES, Reporter
Senators yesterday slammed government officials running the energy development portfolio for allegedly not learning from previous transactions that to date continue to hound the state's fiscal health.
In a privilege speech, Sen. Joker P. Arroyo assailed the National Power Corp. (Napocor) and the Power Sector Assets and Liabilities Management Corp. (PSALM) for their "unabated treachery" in continually exposing the government to financial difficulties, more recently with the award of the privatization contract for the Masinloc power plant.
The contract, he said, exposed the government to more financial woes even as it grapples with the scandal arising from another contract for the Terminal 3 of the Ninoy Aquino International Airport (NAIA-3).
Sen. Miriam Defensor Santiago broached the possibility of citing PSALM officials for contempt for awarding a major privatization contract after they were ordered not to do so by Joint Congressional Power Commission (JCPC)
She was referring to the recent decision of PSALM to award the Masinloc power generating plant contract to YNN Pacific Consortium. Inc.
By far, Masinloc is the biggest power plant privatization contract completed by PSALM since its inception and yet, Mr. Arroyo said the winning bidder had a paid-in capital of less than P1 million.
The PSALM has stressed that the government is protected in the transaction via a security bid of $9 million that can be forfeited in favor of the government in the event YNN fails to deliver on its commitment.
This, however, could not make up for transacting with "fly-by-night undercapitalized companies," Mr. Arroyo stressed.
"The bid requirements do not contain specific requirements or criteria on who could bid," he said. "In short, there is no solid basis for evaluating the 'track record' of prospective bidders. That is how YNN Pacific Consortium, Inc., which you cannot contact because it has no registered telephone, won the bid."
Mr. Arroyo hit Napocor and PSALM for the "wicked, wicked ways" of their financial transactions despite the fresh lesson of the Philippine International Air Terminals Co. (PIATCo) controversy.
"The scandal that is PIATCo happened partly because it was undercapitalized, so it had to bring in [German airport developer] Fraport, which contributed 60% of the cost of the terminal but holds only 30% equity on paper, resulting in charges of dummying," the senator said.
The government, did not lack any reference for problematic transactions, he added, citing the National Steel Corp. which was "sold to an undercapitalized Malaysian firm."
CONTEMPT
In tackling the possibility of citing PSALM officials for contempt, Ms. Santiago said: "They gave a notice of award during the holidays. What was big rush when people are concerned when buying gifts? I don't' understand why these particular officials of the government, after receiving proper order from properly and constitutionally established oversight committee should violate it so abruptly."
Just before issuing the notice of award, PSALM officials were ordered by representatives of both houses of Congress not to do so.
She said direct contempt was the necessary "protective measure to defend the power and sovereignty of the legislative branch of the republic to these anonymous officials."
Finance Sec. and PSALM chairwoman Juanita P. Amatong has announced that the bid was awarded to YNN last Dec. 23. The firm's price offer topped that of First Generation Holdings Corp., a company controlled by the Lopez group, the majority shareholder of leading power distributor Manila Electric Co.
"They have no power to turn against an explicit order that was agreed upon unanimously by a bicameral commission. This being so, I propose that we must teach people a lesson that bicameral commission composed of members of both houses of Congress can only be disregarded at extreme chances. They should not act as if they own the energy sector of this country. They might be technical experts on these matters but that does not immediately validate their good faith," Ms. Santiago said.
Moreover, Mr. Arroyo noted that the asset should have been sold on cash basis and not on deferred basis given the volatile fiscal position of the national government.
"It is rather unfair that Malacañang should badger Congress to do the dirty and unpopular job of raising more taxes yet allows the scandal-ridden Napocor and its related agencies, PSALM and Transco (National Transmission Corp.), and its high priest, the Secretary of Energy (Vincent S. Perez), to under perform and worst, continue with its bad practices of the past that has given the country and people so much financial pain," Mr. Arroyo said.
Mr. Arroyo's privilege speech was referred to the Senate committee on energy for investigation.
Citing documents from the Securities and Exchange Commission (SEC), Mr. Arroyo earlier said YNN Pacific Consortium Inc. had no track record in the energy sector since it was incorporated only on July 19, 2004 or five months before the contract was awarded by PSALM.
The General Information Sheet filed by YNN Pacific Consortium Inc. with the SEC last Sept. 13 showed that it has an office building at 1122 Perez St., Paco, Manila but it has no telephone number and corporate tax identification number. Its incorporators include Sunny T. Sun, Mariano L. Tan, Lawrence The, Joseph Ty and Edison Ty.
Amidst criticisms to the asset sale, PSALM has stood firm behind the Australian firm.
During the recent Senate hearing on Napocor privatization, PSALM president Raphael Lotilla noted that it has letter of credit worth P500 million or $9 million which will stand even if the Australian company will back out from the deal.
He added that the first major asset sale of debt-saddled Napocor will yield interest in other assets of the state-run utility. PSALM is mandated by law to carry out the sale of Napocor's generation and transmission assets and it has 270 days from the award and effectivity of the sale agreement to obtain the consent of the international creditors of Napocor to the sale and transfer of the Masinloc plant. The creditors include the Asian Development Bank, World Bank and Japan Bank for International Cooperation.
Upon the grant of the creditors' consent, YNN is expected to pay up front 40% of $561 million while the balance of 60% will be paid in seven years at 12% annual interest.
Mr. Lotilla further expressed optimism that they will be able to sell 70% of Napocor's power plants by end-2005. It expects to make $4 billion to $5 billion from the sale of power plants.
Prior to the Masinloc contract, PSALM had privatized five small power plants since March: Loboc hydroelectric plant in Bohol, which was sold to Santa Clara International Corp. for $1.42 million; Cawayan hydroelectric plant in Sorsogon, to Sorsogon II Electric Cooperative, Inc. for $410,410; Talomo hydroelectric plant in Davao, to Aboitiz-owned Hydro Electric Development Corp. for $1.37 million; Agusan River mini-hydroelectric plant, to First Generation Holdings Corp. for $1.5 million; and Barit hydroelectric plant in Camarines Sur, to lawyer Ramon I. Constancio for $480,000.
By CARINA I. RONCESVALLES, Reporter
Senators yesterday slammed government officials running the energy development portfolio for allegedly not learning from previous transactions that to date continue to hound the state's fiscal health.
In a privilege speech, Sen. Joker P. Arroyo assailed the National Power Corp. (Napocor) and the Power Sector Assets and Liabilities Management Corp. (PSALM) for their "unabated treachery" in continually exposing the government to financial difficulties, more recently with the award of the privatization contract for the Masinloc power plant.
The contract, he said, exposed the government to more financial woes even as it grapples with the scandal arising from another contract for the Terminal 3 of the Ninoy Aquino International Airport (NAIA-3).
Sen. Miriam Defensor Santiago broached the possibility of citing PSALM officials for contempt for awarding a major privatization contract after they were ordered not to do so by Joint Congressional Power Commission (JCPC)
She was referring to the recent decision of PSALM to award the Masinloc power generating plant contract to YNN Pacific Consortium. Inc.
By far, Masinloc is the biggest power plant privatization contract completed by PSALM since its inception and yet, Mr. Arroyo said the winning bidder had a paid-in capital of less than P1 million.
The PSALM has stressed that the government is protected in the transaction via a security bid of $9 million that can be forfeited in favor of the government in the event YNN fails to deliver on its commitment.
This, however, could not make up for transacting with "fly-by-night undercapitalized companies," Mr. Arroyo stressed.
"The bid requirements do not contain specific requirements or criteria on who could bid," he said. "In short, there is no solid basis for evaluating the 'track record' of prospective bidders. That is how YNN Pacific Consortium, Inc., which you cannot contact because it has no registered telephone, won the bid."
Mr. Arroyo hit Napocor and PSALM for the "wicked, wicked ways" of their financial transactions despite the fresh lesson of the Philippine International Air Terminals Co. (PIATCo) controversy.
"The scandal that is PIATCo happened partly because it was undercapitalized, so it had to bring in [German airport developer] Fraport, which contributed 60% of the cost of the terminal but holds only 30% equity on paper, resulting in charges of dummying," the senator said.
The government, did not lack any reference for problematic transactions, he added, citing the National Steel Corp. which was "sold to an undercapitalized Malaysian firm."
CONTEMPT
In tackling the possibility of citing PSALM officials for contempt, Ms. Santiago said: "They gave a notice of award during the holidays. What was big rush when people are concerned when buying gifts? I don't' understand why these particular officials of the government, after receiving proper order from properly and constitutionally established oversight committee should violate it so abruptly."
Just before issuing the notice of award, PSALM officials were ordered by representatives of both houses of Congress not to do so.
She said direct contempt was the necessary "protective measure to defend the power and sovereignty of the legislative branch of the republic to these anonymous officials."
Finance Sec. and PSALM chairwoman Juanita P. Amatong has announced that the bid was awarded to YNN last Dec. 23. The firm's price offer topped that of First Generation Holdings Corp., a company controlled by the Lopez group, the majority shareholder of leading power distributor Manila Electric Co.
"They have no power to turn against an explicit order that was agreed upon unanimously by a bicameral commission. This being so, I propose that we must teach people a lesson that bicameral commission composed of members of both houses of Congress can only be disregarded at extreme chances. They should not act as if they own the energy sector of this country. They might be technical experts on these matters but that does not immediately validate their good faith," Ms. Santiago said.
Moreover, Mr. Arroyo noted that the asset should have been sold on cash basis and not on deferred basis given the volatile fiscal position of the national government.
"It is rather unfair that Malacañang should badger Congress to do the dirty and unpopular job of raising more taxes yet allows the scandal-ridden Napocor and its related agencies, PSALM and Transco (National Transmission Corp.), and its high priest, the Secretary of Energy (Vincent S. Perez), to under perform and worst, continue with its bad practices of the past that has given the country and people so much financial pain," Mr. Arroyo said.
Mr. Arroyo's privilege speech was referred to the Senate committee on energy for investigation.
Citing documents from the Securities and Exchange Commission (SEC), Mr. Arroyo earlier said YNN Pacific Consortium Inc. had no track record in the energy sector since it was incorporated only on July 19, 2004 or five months before the contract was awarded by PSALM.
The General Information Sheet filed by YNN Pacific Consortium Inc. with the SEC last Sept. 13 showed that it has an office building at 1122 Perez St., Paco, Manila but it has no telephone number and corporate tax identification number. Its incorporators include Sunny T. Sun, Mariano L. Tan, Lawrence The, Joseph Ty and Edison Ty.
Amidst criticisms to the asset sale, PSALM has stood firm behind the Australian firm.
During the recent Senate hearing on Napocor privatization, PSALM president Raphael Lotilla noted that it has letter of credit worth P500 million or $9 million which will stand even if the Australian company will back out from the deal.
He added that the first major asset sale of debt-saddled Napocor will yield interest in other assets of the state-run utility. PSALM is mandated by law to carry out the sale of Napocor's generation and transmission assets and it has 270 days from the award and effectivity of the sale agreement to obtain the consent of the international creditors of Napocor to the sale and transfer of the Masinloc plant. The creditors include the Asian Development Bank, World Bank and Japan Bank for International Cooperation.
Upon the grant of the creditors' consent, YNN is expected to pay up front 40% of $561 million while the balance of 60% will be paid in seven years at 12% annual interest.
Mr. Lotilla further expressed optimism that they will be able to sell 70% of Napocor's power plants by end-2005. It expects to make $4 billion to $5 billion from the sale of power plants.
Prior to the Masinloc contract, PSALM had privatized five small power plants since March: Loboc hydroelectric plant in Bohol, which was sold to Santa Clara International Corp. for $1.42 million; Cawayan hydroelectric plant in Sorsogon, to Sorsogon II Electric Cooperative, Inc. for $410,410; Talomo hydroelectric plant in Davao, to Aboitiz-owned Hydro Electric Development Corp. for $1.37 million; Agusan River mini-hydroelectric plant, to First Generation Holdings Corp. for $1.5 million; and Barit hydroelectric plant in Camarines Sur, to lawyer Ramon I. Constancio for $480,000.
0 Comments:
Post a Comment
<< Home