PSALM to reject YNN upfront payment

02 Aug 2006

The Power Sector Assets and Liabilities Management Corporation (PSALM) will no longer accept the upfront payment of YNN Pacific Consortium for the 600-megawatt Masinloc coal-fired power plant after the sale contract officially lapses on 06 August even if YNN requests that it be given more time.

This was made clear by PSALM President Nieves L. Osorio amid allegations by some congressmen and members of the media that PSALM would bend backward to accommodate YNN and accept the $227-million upfront payment to enable the government to complete the sale of the Masinloc power facility in Zambales.

"Our relationship with YNN will cease upon the effectivity of the termination notice on 06 August," she pointed out. "This means that even if YNN requests that it be given more leeway - which it has not - PSALM is no longer in a position to entertain such petition. Besides, there is no indication at the moment that YNN can come up with the upfront payment."
Ms. Osorio again clarified that the 30-day notice of termination for the sale contract will expire on Aug. 6. This is not an extension but a procedure stipulated in the Asset Purchase Agreement (APA).

"The 30-day stretch serves as a winding down period," she stressed. "It is not an extension."

During last Tuesday's meeting of the House Committee on Energy on the Masinloc sale, Ms. Osorio spelled out that the sale was done in accordance with the mandate stipulated in Republic Act No. 9136, the Electric Power Industry Reform Act, and the provisions stated in the bidding procedures and the transaction documents which include the APA. The bid documents were submitted to the Commission on Audit before the bidding for the Masinloc power plant was conducted, she added.

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