Congress terminates Masinloc plant sale

The Joint Congressional Power Commission (JCPC) directed the Power Sector Assets and Liabilities Management Corp. (PSALM) yesterday to terminate the controversial sale of the Masinloc power plant in Zambales to YNN Pacific Consortium Inc. by Aug. 6.

Sen. Miriam Defensor- Santiago, who co-chairs the JCPC, said the recommendation to terminate the asset purchase agreement between PSALM and YNN was the unanimous decision of the commission, which held a two-hour hearing yesterday.

This will pave the way for the immediate rebidding of the 600-megawatt power plant.

Santiago pointed out that under the contract, YNN promised to pay 40 percent of the bid price of P561.740 million by March 31. When it failed to meet the payment deadline, it was granted a three—month extension until June 30.

YNN reportedly requested the extension to allow the entry of Malaysian firm Ranhill Berhad as investor.

When YNN failed to meet the second payment deadline last June 30, PSALM forfeited the $14-million performance bond.

"It’s a matter for speculation why Ranhill wants to buy the YNN shares even as the Masinloc power plant is being sold as a merchant plant without a transitional supply contract," Santiago said.

Santiago also echoed public suspicions that Ranhill Berhad expects PSALM to pressure Meralco into signing an agreement with YNN in exchange for concessions concerning its $20-billion liability to the government and the pending Meralco application for a rate hike.

Former President Fidel Ramos attended the inquiry along with Finance Secretary Margarito Teves, who is concurrent PSALM chairman. Also present were PSALM head Nieves Osorio, Philippine Electricity Market Corp.’s Lasse Matti Holopainen, and Transco’s Gary Makasiar.

In his testimony, Ramos reiterated that there is no reason to link the Malaysian Party UMNO to Ranhill Berhad or the ruling Lakas party to the YNN sale.

"I’d like to stand on the statement that I don’t know any of these characters," he said.

The former president was linked to the controversial deal when Senate Minority Leader Aquilino Pimentel Jr. raised suspicion that "strings were pulled" by some "powerful figures" in behalf of foreign companies in pulling off the YNN deal.

Pimentel said though that Ramos was able to fully explain his side yesterday. However, Sen. Sergio Osmeña III took note of a letter reportedly sent to Malacañang by Malaysian Prime Minister Abdullah Badawi on the Masinloc sale.

"While it is imperative that any irregularity in this transaction be uncovered and all parties responsible be held accountable, we should not, in the process (unless backed up by substantial evidence) cast undue aspersions upon the UMNO Party, which is headed by Prime Minister Abdullah Badawi of Malaysia, a strong ASEAN partner," Ramos said.

Ramos, founder of the Lakas-NUCD party, also defended former Malaysian Prime Minister and former UMNO Party chief Mohammad Mahathir "who continues to promote a united and progressive ASEAN as crucial to the survival of its ten-member parties in the Philippines."

"For the record, let me say once again that I do not know Ranhill Berhad much less the people who own and manage the company. I do not know whether or not these people are officials or members of the UMNO and I do not have any direct or indirect involvement or interest, past or present, in the Masinloc-YNN/Ranhill Berhad transaction," Ramos said in a prepared statement submitted to the committee.

The former president also claimed that his knowledge of the Masinloc sale was limited to what he read in the newspapers and watched on television.

During questioning by Osmeña and Sen. Joker Arroyo, Ramos reiterated the need to review the Electric Power Industry Reform Act, saying that amendments to the EPIRA are "badly needed and long overdue."

This, he said, would eliminate cross ownership, enhance competition and provide open-market access to large consumers, prevent abuse and collusion among related sectors.

He evaded questions though on the independent power producers (IPPs), which he approved during his term to address the power interruptions at that time.

After the hearing, Santiago conceded that evidence is needed to prove Ramos’ alleged links to the Malaysian firm.

"It’s (Ramos’ testimony) just a blanket denial. Under the rules of court, you have to prove (the accusations)," Santiago said.

Meanwhile, Osorio defended PSALM from allegations that members of its board benefited from the sale of Masinloc to YNN.

"Only about P4 million was received by PSALM officials as corporate variable in 2005 but this was not an offshoot of the YNN sale," he clarified.