PSALM to hold investors’ forum next week

The Power Sector Assets and Liabilities Management Corp. (PSALM) will hold an investors’ forum on Feb. 16 to update the business community on the development in the National Power Corp. (Napocor) privatization.

"We want to keep the investors abreast of our new privatization strategie," PSALM vice president for asset management and disposal Froilan Tampinco said.

Tampinco said PSALM will likely present new modifications on certain provisions of the transaction documents. "We are trying to put some qualifying technical and financial requirements to further safeguard the interest of the government.

Tampinco said they would also seek the assurance or commitment from the new owners of the generating power facilities that would operate the power plants once these are transferred to them.

Energy Secretary and PSALM vice chairman Vincent S. Perez said they also plan to raise the amount of the performance bond being asked of the winning bidder of Napocor’s assets from the fixed $9 million to as high as $20 million.

Perez said if approved, the proposed performance bond would provide additional safeguard to the government.

The energy chief said PSALM has informed the Joint Congressional Power Commission (JCPC) of the increase in the performance bond.

"The JCPC endorses the planned increase in performance bond," Perez said. But he added they have to consult the investors’ community first before implementing such changes.

Based on the proposal, PSALM would ask the winning bidder of big generating assets or those with a capacity of 600 megawatts (MW) and higher to post a bond of $20 million; $10 million for middle-sized plants; and $5 million for small power facilities.

The stricter rules came after some sectors criticized the sale of the 600-MW Masinloc power plant to YNN Pacific Consortium Inc.

The sale structure for Masinloc stated that this would be an asset sale and the winning bidder has no obligation to run the plant and may remove, dismantle or transfer the asset. The YNN consortium paid a $9 million bond.

But YNN said it intends to operate the facility and keep the existing employees of the coal-fired power plant.

"Our intention is to run and keep the employees of Masinloc. What we are requesting those that questions our capability to run the power facility is to give us a chance," said Gary Makasiar, YNN Pacific spokesman.

"We have no intention of failing. We have already paid a bond of $9 million. They should realize the implications of these issues not only to Masinloc but to other future assets that would be sold by PSALM," Makasiar added.

Based on the sale agreement with PSALM, the owner has flexible employee arrangements and no obligation placed on investors with regard to existing plant employees.

Makasiar said they also welcome PSALM’s plan to apply stricter requirements to prospective bidders of Napocor plants as long as this will not affect their contract.

"The effect of the change in rules should not be retroactive. They have a contract with us and they should honor it. As we know, changing rules in the middle of the game may turn off potential investors," he said.

YNN won the Masinloc facility with a bid price of $561.72 million or effectively $936 per kilowatt.

The group would pay PSALM 40 percent upfront cash and 60 percent of the purchase price would be paid through deferred payments over seven years.