YNN’s final deadline: June 30
PSALM ASSURES SENATE GOVT HOLDING
HIGHER BOND OF $14 MILLION

THE congressional oversight committee on power firmed up a consensus setting June 30 as the final nonextendable deadline for YNN Pacific Consortium Inc. to fulfill its contractual commitment to pay for the Masinloc power plant, after which the government would annul its award and proceed to hold a new bidding for the 600-megawatt coal-fired facility.
       Power Sector Assets and Liabilities Management Inc. (PSALM) president Nieves Osorio confirmed this at a hearing of the bicameral oversight panel Thursday.
       “We are giving them [YNN] until June 30…under our agreement, we can forfeit their performance bond after that last extension,” Osorio said under questioning by Sen. Sergio Osmeña III.
       Osmeña informed the oversight panel he was supporting an earlier position by Sen. Joker Arroyo and Senate Minority Leader Aquilino Pimentel Jr. asking the government to foreclose YNN’s $11.2-million bond in favor of the State and rebid the Masinloc plant due to YNN’s failure to meet its financial obligation under the privatization agreement.
       Froilan Tampinco, vice president for Asset Management and Electricity Trading, confirmed that Psalm had received the $14-million performance bond it required from the YNN after extending the deadline to June 30 from March 31 for YNN Pacific Consortium Inc. to deliver the $227-million upfront payment, rentals and option price.
       “YNN tried to request for the inclusion of a bilateral power supply contract as an additional condition to drawing the same by Psalm,” Tampinco said. But they did not agree to this since this is contrary to the terms of the Asset Purchase Agreement with YNN.
       While the discussions were going on, Tampinco said the original $11-million bond remained effective and in Psalm’s possession, so the government’s interest was amply protected.
       “It is still in the best interest of the government that Psalm gives this transaction as much leeway to succeed. The bid of YNN is one that is difficult to duplicate should Psalm call for a rebidding prior to the deadline. By just granting a few months’ extension, Psalm is simply mindful of its Electric Power Industry Reform Act mandate to maximize proceeds for the government. Meanwhile, Masinloc continues to operate and generate revenues for the National Power Corp.,” said Tampinco.
       Since the bidding held on December 1, 2004, Senator Arroyo noted that there have been several extensions of the grace period granted to YNN to meet its obligation to pay an upfront fee of $227 million, representing 40 percent of its winning bid price of $562 million. The last deadline expired March 31 but YNN, in asking to extend the new deadline to June 30, offered to increase its performance bond from $11.2 million to $14.2 million.
       Pimentel said the government should not grant any more reprieve if YNN still fails to meet its latestJune 30 deadline to fulfill its commitment. B. Fernandez, P.A. Isla