03 July 2006
The government should reverse its privatization program of public utilities as it does not guarantee the consumers of lower rates and quality service, an advocacy group today said, in reaction to the failure of a “mere broker” to deliver its $227.54 million down payment for the 600-MW Masinloc power plant.
The Freedom from Debt Coalition (FDC) said the decision of Power Sector Assets and Liabilities Management Corporation (PSALM) to finally forfeit the $14 million performance bond of YNN consortium “was actually long overdue.”
“This government has to stop this privatization effort. It cannot even sell one of its best plants without under-the-table arrangements, without unethical acts. Even PSALM itself admits that the government continues to earn from the income generated by Masinloc these days. Then why should it sell one of its most profitable plants and make the consumers suffer in the process?” asked FDC vice president Wilson Fortaleza.
“What PSALM and this government have only attracted so far in the privatization of the power industry are dubious investors and not really companies or participants experienced to run the power industry and are those that can make a better industry where service and not profit is of utmost importance,” stressed Fortaleza.
The government had already given two extensions – March and June 30, 2006 – for YNN to deliver its initial payment for Masinloc. This, according to FDC, is already too much leeway for the corporation, yet it still failed to make it.
“This only proves that YNN has no financial capability at all to acquire Masinloc power plant,” Fortaleza said.
Ranhill Berhad, the would-be partner in YNN consortium, wants a power sales agreement between YNN and Meralco. It reportedly sets the power supply contract with Meralco as a condition for the release of its first tranche for its acquisition of YNN.
Fortaleza lamented that such deal will be at the expense of the consumers.
“This will in effect bind the consumers to a new power contract which could lead to a higher power rates in the offing as YNN will recover through the contract its $561-million bid of Masinloc including the 12 percent interest it will have to pay for the balance after the $227-million initial payment is made. Also to be recovered is the $14-million performance bond that was forfeited. This is a clear manifestation of the obvious interest of Berhad in coming in as a partner of YNN. It sees buying Masinloc as an investment opportunity. As expected, Berhad has not shown any indication of interest of running the plant as it has no track record in the power industry,” Fortaleza said.