Masinloc power plant sale kept alive with new investors
The Philippine Star
05/10/2006
The sale of the Masinloc power plant has been kept alive by the entry of new investors, a ranking official of the Power Sector Assets and Liabilities Management Corp. (PSALM) said.
PSALM vice president Froilan Tampinco said they have asked YNN Pacific Consortium Inc. – the winning bidder of the power facility – to increase its performance bond as a guarantee that the group will not renege on its obligation to settle the upfront payment amounting to $227 million and later on settle the balance of $334.7 million to complete its winning bid of $561.7 million.
PSALM’s decision to hike YNN’s performance bond from $11 million to $14 million and extend the deadline for the delivery of the upfront payment until June 30, 2006 resulted from a recent meeting with YNN officials and the Malaysian group led by Ranhill Berhad president and chief executive officer Tan Sri Hamdan Mohamad and Tan Sri Majid Khan, chairman of Ranhill Power Berhad, a subsidiary of Ranhill Berhad.
Ranhill, a publicly-listed company in Malaysia engaged in water, oil and gas, power and infrastructure development, has joined the consortium. PSALM expects Ranhill and YNN to complete within the three-month extension all financial arrangements related to Ranhill’s investments in YNN. Ranhill is tapping ABN AMRO for its fund-raising requirement. It is also talking with the Private Sector Operations Department of the Asian Development Bank (ADB) for project refinancing and possible equity investment.
YNN-Ranhill recently submitted to PSALM a copy of a letter-agreement between ADB and Ranhill dated March 27, 2006 in which ADB agreed to start its review of and due diligence on the project.
Another letter, this time from ABN AMRO dated March 27, 2006, was also submitted confirming its appointment as sole rating advisor, sole lead manager and sole bookrunner for Ranhill.
Prior to the decision to extend the deadline for the delivery of the upfront payment, PSALM met with the officers of ADB’s public sector and private sector departments to inquire on the process and check the feasibility of the arrangements being proposed by YNN-Ranhill. These issues were addressed to the satisfaction of PSALM.
"Thus, by keeping the Masinloc deal alive – at least for the next three months – the government has a bigger chance of completing the transaction and collecting not only the upfront payment of $227 million but, in due time, the entire bid price of $561.7 million," Tampinco said.
The PSALM official said the additional $3-million performance bond is enough indication of YNN-Ranhill’s seriousness to push through with the deal.
He said it is also sufficient protection for government’s interests in the next three months.
According to Tampinco, the decision of PSALM to consider Ranhill’s offer took into consideration the fact that a rebidding for the Masinloc power plant cannot be conducted immediately since a supply contract has yet to be signed with the Manila Electric Co. (Meralco), the power distributor controlling about 70 percent of Luzon’s electricity market on the retail level.
He noted that the supply contracts with Meralco, or with major electricity users, are important as these will assure a committed market for the electricity that the Masinloc plant will generate. YNN and Ranhill are aware that they have to undertake an aggressive marketing effort in this respect.
"When PSALM auctioned off Masinloc in December 2004, all bidders were aware that no supply contract was attached to it – it was offered as a merchant plant. And as far as the date of the commercial operation of the wholesale electricity spot market (WESM) was concerned, PSALM did not offer any guarantee.
The PSALM official said they are awaiting the commercial operation of the WESM to assure Masinloc and other privatized power plants as well as National Power Corp.’s (Napocor) independent power producers (IPPs) a competitive market for the electricity they are capable of producing.
"We are happy to note that Meralco is supportive of the government’s efforts to institutionalize open access through which power generators will be able to sell electricity directly to consumers located in the franchise areas of the distributors. Under this set-up, the distributors will be compensated for the use of their wires through the wheeling rates approved by the Energy Regulatory Commission," Tampinco said.
He said WESM, together with open access, will promote market competition down to the retail level, eventually resulting in better services and prices for consumers.
05/10/2006
The sale of the Masinloc power plant has been kept alive by the entry of new investors, a ranking official of the Power Sector Assets and Liabilities Management Corp. (PSALM) said.
PSALM vice president Froilan Tampinco said they have asked YNN Pacific Consortium Inc. – the winning bidder of the power facility – to increase its performance bond as a guarantee that the group will not renege on its obligation to settle the upfront payment amounting to $227 million and later on settle the balance of $334.7 million to complete its winning bid of $561.7 million.
PSALM’s decision to hike YNN’s performance bond from $11 million to $14 million and extend the deadline for the delivery of the upfront payment until June 30, 2006 resulted from a recent meeting with YNN officials and the Malaysian group led by Ranhill Berhad president and chief executive officer Tan Sri Hamdan Mohamad and Tan Sri Majid Khan, chairman of Ranhill Power Berhad, a subsidiary of Ranhill Berhad.
Ranhill, a publicly-listed company in Malaysia engaged in water, oil and gas, power and infrastructure development, has joined the consortium. PSALM expects Ranhill and YNN to complete within the three-month extension all financial arrangements related to Ranhill’s investments in YNN. Ranhill is tapping ABN AMRO for its fund-raising requirement. It is also talking with the Private Sector Operations Department of the Asian Development Bank (ADB) for project refinancing and possible equity investment.
YNN-Ranhill recently submitted to PSALM a copy of a letter-agreement between ADB and Ranhill dated March 27, 2006 in which ADB agreed to start its review of and due diligence on the project.
Another letter, this time from ABN AMRO dated March 27, 2006, was also submitted confirming its appointment as sole rating advisor, sole lead manager and sole bookrunner for Ranhill.
Prior to the decision to extend the deadline for the delivery of the upfront payment, PSALM met with the officers of ADB’s public sector and private sector departments to inquire on the process and check the feasibility of the arrangements being proposed by YNN-Ranhill. These issues were addressed to the satisfaction of PSALM.
"Thus, by keeping the Masinloc deal alive – at least for the next three months – the government has a bigger chance of completing the transaction and collecting not only the upfront payment of $227 million but, in due time, the entire bid price of $561.7 million," Tampinco said.
The PSALM official said the additional $3-million performance bond is enough indication of YNN-Ranhill’s seriousness to push through with the deal.
He said it is also sufficient protection for government’s interests in the next three months.
According to Tampinco, the decision of PSALM to consider Ranhill’s offer took into consideration the fact that a rebidding for the Masinloc power plant cannot be conducted immediately since a supply contract has yet to be signed with the Manila Electric Co. (Meralco), the power distributor controlling about 70 percent of Luzon’s electricity market on the retail level.
He noted that the supply contracts with Meralco, or with major electricity users, are important as these will assure a committed market for the electricity that the Masinloc plant will generate. YNN and Ranhill are aware that they have to undertake an aggressive marketing effort in this respect.
"When PSALM auctioned off Masinloc in December 2004, all bidders were aware that no supply contract was attached to it – it was offered as a merchant plant. And as far as the date of the commercial operation of the wholesale electricity spot market (WESM) was concerned, PSALM did not offer any guarantee.
The PSALM official said they are awaiting the commercial operation of the WESM to assure Masinloc and other privatized power plants as well as National Power Corp.’s (Napocor) independent power producers (IPPs) a competitive market for the electricity they are capable of producing.
"We are happy to note that Meralco is supportive of the government’s efforts to institutionalize open access through which power generators will be able to sell electricity directly to consumers located in the franchise areas of the distributors. Under this set-up, the distributors will be compensated for the use of their wires through the wheeling rates approved by the Energy Regulatory Commission," Tampinco said.
He said WESM, together with open access, will promote market competition down to the retail level, eventually resulting in better services and prices for consumers.
0 Comments:
Post a Comment
<< Home