Tarnished jewel

After hemming and hawing for more than a year, the Power Sector Assets and Liabilities Management Corp. (PSALM) issued a statement that it was forfeiting the $14-million performance bond of YNN Pacific Consortium Inc., winning bidder of the 600-megawatt Masinloc power plant located in Zambales. Heard all around the small circle of power sector players were whispers of "I told you so."

The supposedly successful sale of Masinloc in end-2004 had been touted as the jewel of the government’s power privatization efforts by no less than the same people who were floundering in delivering the supposed benefits of the plan to deregulate the power sector including selling all assets of the National Power Corp.

The pathetic effort to give credence to the flawed Electric Power Industry Restructuring Act in 2001 had been met with – and continues to meet – one fiasco after another. For one, the timeline for the auction of state-owned Napocor’s assets had been moved countless times.

Then, finally, the public sale happened in mid-2004. Unfortunately, there were only few takers – just four small Napocor power plants, with a combined capacity that would not sufficiently power the supermarket section of the SM Mall of Asia were sold.

Before the year 2004 ended, YNN appeared out of the blue with its $561.74-million bid, handily beating the Lopez Group’s First Generation Holdings’ offer price of $274.85 million, which incidentally was 30 percent lower than the government’s reserve price of $388 million.

YNN who?

As the energy department’s public relations people announced the deal as one of the government’s achievements for the year, there was another face to the "good news" that was quickly emerging, especially among those who were familiar with the power industry.

Who was YNN really? It seems that YNN Pacific’s partners, Philippine-based YNN Holdings Corp., had a paid-up capital of only P625,000, while its Australian partner, Green Pacific Energy Ltd., had a market capitalization of only $10 million.

Not only did the company seem not to have enough money to buy Masinloc, it did not even have a decent track record in operating power plants. Its pitiful portfolio was confined to a small coal-fired plant in China and the Green Pacific Energy Ltd.’s five-megawatt power plant.

Any businessman worth his salt will immediately come to the conclusion that YNN, headed by Sunny Sun (who?), is just staking rights to an asset that it believes can be quickly sold to another company – for a profit, of course.

Speculators all

In the business world, speculators who can successfully swing megabuck deals and make a tidy income in the process are lauded and admired. In the case of YNN, they took a risk, and failed. Well, they’re still trying to salvage the situation by bringing in a new partner, the Malaysian Ranhill Power Berhad, one of the companies affiliated with the conglomerate Ranhill Berhad.

While Ranhill Power appears a to be in better shape than YNN financially and technically, it is also just another company – albeit more prudent – that is trying to see if it can turn the Masinloc power plant into a profitable venture.

Talk of incompetence or corruption

Many find it difficult to understand how this whole thing has unraveled in such an unsightly manner.

There is a lot of talk about corruption, of money changing hands – not so much when the bid was awarded to YNN – but for the countless times that the winning bidder begged to have its deadline for delivering the upfront payment of P227.54 million representing the first installment for the now-controversial thermal power plant.

There is also talk of brokering fees being struck between YNN and certain government people to try to negotiate and conclude that all-important but elusive agreement with Meralco to buy the electricity generated by the Masinloc power plant.

Some say it is incompetence. But those involved in the bidding and eventual awarding of the Masinloc sale are seasoned bureaucrats who can spot a fake a mile away. Unless, of course, they were carried away by their eagerness – or greed – to produce "results" that would improve their performance ratings at the end of the year. And, of course, the question that arises is whether the "performance" rating translated to multi-million peso "bonuses."

Doomed jewel

Ranhill Power has until Aug. 6, 2006 to deliver the first payment to PSALM for the sale of Masinloc. And many believe it will take some kind of miracle for Ranhill to pull it off.

If Masinloc is finally declared a failed bid, there are worse problems to confront: An EPIRA that still has not made much progress; and subsequently, Napocor’s continued mounting debt problems. I think the last count was at P600 billion. And guess who is to shoulder all of it.

And, of course, when Masinloc plant is up for bidding again, guess what the price will be and who will eventually get this "tarnished" jewel? But that will be another story.

Non-wager Hold’em tournament at Tagaytay City

In response to various inquiries received, Philippine Poker Tour (PPT) announced that the registration for the PPT leg/satellite competition to be played at Casino Filipino Tagaytay on 29th July 2006 may also be done through the Internet.

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The Philippine Poker Tour, a leading proponent of non-wager poker tournaments, is working hand in hand with Pagcor to promote poker as a mind game giving recognition and reward to players seriously developing their skills in preparation for international competition. PPT aims to organize and promote high quality poker tournaments and provide the proper competitive forum to nurture local poker talents.

For more details, visit the PPT official website at www.PhilippinePokerTour,com <http://www.philippinepokertour,com/>or call the Secretariat (c/o Cindy) at 817-9092 or 812-0153.

Should you wish to share any insights, write me at Link Edge, 4th Floor, 156 Valero Street, Salcedo Village, 1227 Makati City. Or e-mail me at reydgamboa@yahoo.com or at reygamboa@linkedge.biz. If you wish to view the previous columns, you may visit my website at http://bizlinks.linkedge.biz<http://bizlinks.linkedge.biz/>.