As required under the asset purchase agreement, PSALM president Nieves L. Osorio issued a certificate of closing last Nov. 25 to attest that PSALM had obtained the consent of National Power Corp.’s creditors on the sale of Masinloc, secured possessory rights over the leased premises, and taken all necessary corporate actions and obtained all approvals and authorizations needed to effect the sale.
Osorio said she also certified that there is sufficient supply of coal for the power plant at the closing date, and more incoming shipments would be delivered in the next six months.
Under the asset purchase agreement, PSALM should complete all conditions precedent by Dec. 2. Failure to complete would allow YNN to walk away from the deal after 30 days without the risk of forfeiture of its $11-million performance bond. PSALM completed the closing deliveries last Nov. 25.
The YNN Pacific 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.
However, YNN Pacific spokesman Gary Makasiar earlier said there are issues which needs to be resolved before the group makes 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," he said.
Makasiar hinted that with these issues yet to be threshed out, the Dec. 2 schedule for the payment of the 40- percent upfront payment for the power facility "may not be met".
Foremost among the concerns that the YNN Group has 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," Makasiar said.
Another concern, the YNN official said, would be the performance of the wholesale electricity spot market (WESM).
"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.
Based on the sale agreement, PSALM 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.
Masinloc is the sixth power plant to be successfully privatized through bidding. In November last year, PSALM also bid out the 1.2-megawatt Loboc hydroelectric plant (HEP) in Bohol to Sta. Clara International for $1.42 million. In September, PSALM also bid out the 0.4-MW Cawayan HEP in Sorsogon to Sorsogon II Electric Cooperative Inc. for $410,410.
Built at a cost of $530 million in 1998, the Masinloc power plant consists of two generation units with a capacity of 300 MW each. It stands on a 147-hectare site in Bgy. Bani Masinloc, Zambales.