PSALM extends YNN Pacific performance bond by 4 months

State-run Power Sector Assets and Liabilities Management Corp. (PSALM) has extended by four months the effectivity of the performance bond of YNN Pacific Consortium Inc., winning bidder of the 600-megawatt Masinloc coal-fired power plant.

The amended $11.14-million performance bond of YNN which is due to expire on April 7, will be valid up to August 2006, PSALM said.

Last month, PSALM required YNN to extend the effectivity of its irrevocable letter of credit issued by the Bank of China (Hong Kong) Ltd. after asking the consortium to deliver the upfront payment of $222 million on or before March 31.

According to PSALM, failure to deliver the amended bond would have given PSALM the right to forfeit the original bond.

In line with the asset purchase agreement, PSALM set YNN’s deadline for the remittance of the upfront payment and closing deliverables after completing all conditions, including getting the consent of multilateral creditors like the World Bank, Asian Development Bank and Japan Bank for International Cooperation.

PSALM issued its closing deliverables last Nov. 25. Failure to complete would have allowed YNN to walk away from the deal after 30 days without risk of forfeiting the performance bond.

"It is just a matter of time and the Philippine government can eventually collect from YNN," PSALM president Nieves L. Osorio said.

Osorio said PSALM has been committed to protect the interest of the government.

"We have adopted the necessary measures to protect the interests of the Philippine government and we have seen that YNN is exerting all efforts to deliver on its commitments," she said.

The Masinloc plant is so far the biggest plant privatized expected to yield some $562 million in proceeds to the government.

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.