Ramos, Estrada, Arroyo all had a hand in Impsa

MORE BOMBSHELLS: There will be more explosive revelations on millions changing hands as the key players in the $2-million extortion case involving Justice Secretary Hernando Perez and Manila Rep. Mark Jimenez stumble over miscues and miscalculations.

The latest misstep was the disclosure by Jimenez that First Gentleman Mike Arroyo received checks amounting to P8 million when President Gloria Macapagal-Arroyo was still vice president.

Those incriminating checks would not have come out, but somebody miscalculated.

Packing Jimenez off to the United States to face charges may offer temporary relief, but if the feud between him and Perez is not smoothed out in time, and if the miscalculations continue, there will be more of such exposes exploding near the Pasig.

The biggest casualty in this political combat is President Arroyo.

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TRIO WASHING HANDS: The way three presidents are disclaiming responsibility for the power contract of the Argentine firm Industrias Metalurgicas Pescarmona Sociedad Anonima (Impsa*), one would think it is a leprous deal. There is no showing yet that it is.

The truth is that a succession of presidents – Ramos, Estrada and Arroyo – had a hand in the packaging of the Impsa contract to build, rehabilitate, operate and transfer (BROT) the 750-megawatt Caliraya-Botocan-Kalayaan (CBK) hydroelectric plant in Laguna.

This is evident in a timeline starting from July 2, 1993, when then President Ramos invited Impsa to commission the Kalayaan project within three years and started a chain of events that culminated in the CBK project.

(*Although we identify the project with Impsa, the contract of Napocor is actually with CBK Co. Ltd. composed of Impsa as equipment supplier and Edison Mission Energy of California as project managers. Impsa brought in Edison in 1999.)

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GOV’T GUARANTEE: One big issue in the CBK project is that of "sovereign guarantee," whereby the Philippine government commits itself as guarantor of any loan that the company would get to finance the project.

Former President Estrada has told us that while paperwork initiated under then President Ramos continued during his administration, he "froze the ball" when Impsa asked for sovereign guarantee.

According to him, right after he left Malacanang on Jan. 20, 2001, President Arroyo snatched the ball and gave Impsa in a record four days the loan guarantee it wanted. Now he is asking who got the $14 million offered to the president for perfecting the deal.

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JUDGE FOR YOURSELF: Who gave the crucial sovereign guarantee that perfected the deal? In the final legal opinion issued by Justice Secretary Hernando Perez on Jan. 24, 2001, he said on Page 2:

"b. the obligations expressed to be assumed by the Republic of the Philippines in the GACA are, under the laws of the Republic of the Philippines, legal, valid and binding obligations of the Republic of the Philippines, enforceable against it in accordance with the terms thereof, including in the event of the NPC’s privatization, dissolution, bankruptcy, insolvency or merger; the Republic of the Philippines has validly and effectively consented to the transfer and assignment to the Lenders of all of CBK’s rights under the Government Undertaking;"

"GACA" stands for Government Acknowledgment and Consent Agreement – a guarantee that the government would assume the obligations of Napocor (referred to as NPC in the Perez legal opinion) in case the power firm could not pay its obligations.

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NANI TO THE RESCUE: Speaking for Estrada, lawyer Jesus Crispin C. Remulla said that under the legal opinion issued by then Justice Secretary Artemio Toquero (under Estrada), Impsa loans were guaranteed only by Napocor, not by the national government.

The project calls for an investment of over $450 million that includes a 15-year interest-free loan of $70,824,000 to Napocor. The CBK company signed a loan agreement with a group of four international banks that was later syndicated to 10 international banks.

Impsa wanted the Philippine government itself to issue the guarantee, because its lender-banks would not release money without such an assurance. But by that time, Estrada had declared a policy against issuing sovereign guarantees.

When Estrada issued full powers authorization for the GACA, he added a paragraph saying: "For the avoidance of doubt, it is understood that nothing in this letter agreement shall be construed so as to convert the Government Undertaking to a direct guarantee by the Government of the Obligations of CBK to the lenders under the Omnibus Agreement. Neither shall this letter be construed to increase or expand the obligation of the Republic of the Philippines under the Government Undertaking dated 12 July 1999."

When the Arroyo administration came in, Perez rushed his own legal opinion that finally gave Impsa and the banks the sovereign guarantee that they wanted.

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IMPSA TIMELINE: This chronology reviews the main events pertaining to the CBK project:

July 2, 1993 – President Ramos invites Impsa to undertake the Kalayaan project within three years.

Oct. 18, 1993 – Department of Energy asks Impsa to submit a proposal for the Kalayaan Project within 45 days.

Nov. 26, 1993 – Impsa submits a BOT (Build-Operate-Transfer) proposal for Kalayaan Stage I and Stage II.

July 31, 1995 – Napocor endorses the proposal to NEDA-ICC.

Oct. 5, 1995 – NEDA-ICC approves both the project and Impsa under the category of Unsolicited Proposal.

April 17, 1996 – NEDA-ICC gives first pass approval to the unsolicited proposal of Impsa allowing NPC to solicit comparative proposals.

July 26, 1996 – NPC board approves final terms of Impsa’s proposal and the terms of reference (TOR).

Aug. 12, 1996 – NEDA approves the TOR.

Aug. 17, 1996 – NPC invites prospective bidders to submit comparative proposals.

Nov. 26, 1997 – NPC notifies Impsa that it is given 30 days to match the comparative proposal of the FPPC consortium.

Dec. 8, 1997 – Impsa matches comparative proposal.

Dec. 15, 1997 – FPPC files charges against NPC and Impsa at the Office of Ombudsman.

June 22, 1998 – NPC board approves and confirms BROT agreement.

Aug. 3, 1998 – RTC Pasig Judge Danilo Pine dismisses case filed by FPPC.

Oct. 8, 1998 – NEDA board approves project.

Nov. 6, 1998 – BROT agreement signed, with President Estrada signing as witness.

Nov. 23, 1998 – NPC board ratifies BROT agreement.

Feb. 23, 1999 – BOI approves $450-million CBK investment.

May 21, 1999 – Ombudsman dismisses case against NPC and Impsa.

July 12, 1999 – Government Undertaking issued by Finance Secretary Edgardo Espiritu.

July 22, 1999 – NEDA board issues Certificate of Approval.

Sept. 14, 1999 – Supplemental agreement is signed to extend effective date and commence work on Kalayaan.

Sept. 17, 1999 – Estrada visits Impsa in Mendoza.

Sept. 29, 1999 – Estrada discusses CBK project with President Menem in Buenos Aires.

Feb. 7, 2000 – Impsa commences work at site.

Feb. 10, 2000 – Estrada executes full powers authority for Napocor officials to sign and deliver CBK contract.

March 31, 2000 – Period for achieving effective date extended third time.

June 17, 2000 – Estrada executes full powers for signing of Government Undertaking.

June 28, 2000 – President De la Rua writes Estrada asking for assistance in resolving issues. Justice Secretary Artemio Tuquero issues first legal opinion upholding CBK contract.

Aug. 18, 2000 – Loan agreement with four international banks signed.

Sept. 25, 2000 – Signing of extension letter, accession of Edison Mission Energy.

Oct. 12, 2000 – Impsa completes rehabilitation of Unit 2 (181 mw).

Oct. 20, 2000 – Estrada issues full powers authority for appropriate Cabinet official to sign GACA.

Dec. 18, 2000 – RP executes Government Acknowledgement and Consent Agreement (GACA) subject to review by the justice department.

Jan. 17, 2001– Finance department endorses documents to Tuquero, asks for final legal opinion.

Jan. 18, 2001 – NEDA delivers final additional certificate. Estrada instructs Tuquero to hold action on GACA.

Jan. 24, 2001 – Justice Secretary Hernando Perez issues final legal opinion clearing GACA and granting sovereign guarantee.

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