YNN Pacific assures delivery of upfront payment for Masinloc power plant

State-run Power Sector Assets and Liabilities Management Corp. (PSALM) has assured the public that YNN Pacific consortium would deliver the upfront payment for the purchase of the 600-megawatt (MW) Masinloc power plant.

"We wish to assure you that we remain committed to completing our closing deliverables under the agreement," YNN president Sunny Sun in a letter to PSALM president Nieves L. Osorio.

In the same letter, Sun said "We are exerting best efforts to comply with our obligations and conditions for closing in a timely manner."

Osorio welcomed the move of YNN group to immediately acknowledge the receipt of PSALM’s notice.

According to Osorio, PSALM has notified YNN Pacific Consortium Inc. that the group has completed all conditions precedent as specified in the asset purchase agreement that the two parties executed after YNN won the bidding for coal-fired power plant last year.

In its letter dated Nov. 21, PSALM informed YNN that it has complied with all the requirements, including securing the consent of all of National Power Corp.’s creditors for the sale and transfer of the Masinloc plant.

These are the Asian Development Bank, (ADB) the World Bank and the Japan Bank for International Cooperation.

"Now that PSALM has complied with all the requirements to effect the sale of Masinloc, YNN has to comply with its conditions precedent and deliver to PSALM a certification, or any written evidence from any acceptable financial institution, that the funds for the upfront payment, rentals and option price are complete and ready for delivery," she said.

Great Pacific Financial Group, part of the Australian-Filipino YNN Pacific consortium that won the bidding for the 600-megawatt Masinloc coal-fired power facility in the Philippines, earlier said the company is still keen in acquiring the plant.

"We are still the funder of that project," Great Pacific chairman Alfred Wong said, in a brief interview with reporters who recently had a study tour on Australian electricity spot market.

But there are issues raised by YNN which it needs to resolve before it will make the upfront payment. "We have been raising some concerns. We are looking for the answers to our questions before we can make the payment to the project," Makasiar said.

Makasiar hinted that with these issues yet to be threshed out the Dec. 2 schedule for the payment of the over $200 million 40-percent upfront payment for the power facility "may not be met".

Foremost of the concerns that the YNN Group raised is mostly political in nature. "We are affected by the impact of the political issues such as the outcome of the investigation of the Garci tape and the possible takeover of the government of vital public utilities including power plants," he said.

Another concern, the YNN official said, would be the performance of the wholesale electricity spot market (WESM).

The government has to sell 70 percent as required by Sec. 47 of EPIRA, in preparation for open access. The WESM, on the other hand, is to be established, as mandated in Sec. 30 of the EPIRA, to create a competitive market that would help bring cost-effective electricity to consumers.

"These are just some of the uncertainties in the market. Though we are optimistic that the deal will be completed, we need to know the marketability of the power plant. We don’t want our investment to go to waste," he said.

YNN consortium is composed of YNN Holdings with Filipino investors and Great Pacific Financial Group of Australia. The Australian group will reportedly tie up with a big power firm in Australia to help in the running of the newly-acquired power facility.

Australia-based Great Pacific is a diversified company with interests in financial services, property, hotels, infrastructure and mineral resources. It has an interest in Pacific International Hotels, which ranks as the 5th largest hotel chain in Australia, apart from its hotel properties in Bangkok (Thailand) and Shanghai (China).