Government urged to use forfeited Masinloc bond to pay Napocor’s debt

Opposition and pro-administration senators crossed party lines yesterday in asking the government to ensure that the forfeited $14-million bond posted by YNN Pacific Consortium in the aborted purchase of the 600-megawatt Masinloc power plant in Zambales be used instead to pay the ballooning loan obligations of the debt-ridden National Power Corp. (Napocor).

Senators Ralph Recto, Juan Ponce Enrile, Jinggoy Estrada andSerge Osmeña also backed calls for officials of the Power Sector Asset and Liabilities Management Corp. (PSALM) to refund the multi-million peso bonus they paid themselves for selling the coal-fired plant in Zambales since the sale was not consummated.

Senate President Franklin Drilon and Enrile agreed that PSALM should have confiscated the bond a long time ago because it was staining the credibility of the government’s bidding process.

Drilon also urged PSALM officials to comply with a Commission on Audit (COA) report which disallowed the bonus to PSALM executives.

"They (PSALM) should return it (bonus) because the sale never materialized," Enrile added.

The lawmakers stood pat on their position that YNN’s performance bond should be spent solely to pay Napocor debts, the bulk of which was absorbed by the national government and jacked up the budget deficit.

PSALM officials announced over the weekend that it was foreclosing the $14 million bond posted by YNN after it failed to meet the third and final deadline last June 30 to pay the government $227.54 million, which represents 40 percent of the consortium’s winning bid of $562 million for the Masinloc plant.

In an auction held in December 2004, YNN won the bid over Lopez-owned First Generation Holdings Corp., which submitted a bid of only $274.85 million.

The original deadline for the payment was last March 31 but was extended to June 30. The extension was granted on condition that the bond will be increased to $14 million from $11 million.

YNN failed to meet its contract commitments despite the last minute entry of Malaysian partner Ranhill Berhad, which seized majority control of the consortium in an $8 million buyout.

Over the weekend, Senate Minority Leader Aquilino Pimentel urged concerned officials to prepare for a new bidding for the Masinloc plant. — With Delon Porcalla