16 Oct 2006
The sale and transfer of the 112-megawatt (MW) Pantabangan-Masiway Hydroelectric Power Plant Complex to winning bidder First Gen Hydro Power Corporation have been cleared by the major creditors of the National Power Corp.
In their respective letters to the Power Sector Assets and Liabilities Management (PSALM), the Asian Development Bank (ADB), the World Bank and the Japan Bank for International Cooperation (JBIC) indicated their individual consents to the sale and transfer of the Pantabangan-Masiway plant complex, the latest asset of National Power to be successfully auctioned off by PSALM.
The individual consent of National Power's creditors is a major pre-condition for the successful implementation by PSALM of its mandate to privatize all the assets of National Power, which is a vital component in the restructuring of the country's electricity industry.
ADB, which sent its letter on 20 September 2006, was the first creditor to inform PSALM of its no objection to the asset disposal. The letter was signed by ADB director John R. Cooney.
In his consent letter dated 22 September, Joachim von Amsberg, World Bank country director, Philippines East Asia and the Pacific Region, commended the government for its efforts in "pursuing the privatization of National Power's generation and transmission assets."
JBIC completed the creditors consent to the sale of the power facility located in Nueva Ecija on 04 October. "After careful consideration of the request [of National Power and PSALM] and in accordance with all existing loan agreements, we advise that Japan Bank for International Cooperation hereby consents to the transfer of the ownership from the borrower (National Power) to PSALM Corp., and the award and sale to [the] winning bidder by PSALM Corp.," stated the letter signed by Mr. Shin Oya, JBIC director, Division 2, International Finance Department I.
Having obtained the consent of the major creditors, PSALM is set to call on the USD51.6 million, or 40% of the minimum upfront payment, required from First Gen Hydro for its purchase of the Pantabangan-Masiway plant complex, disclosed PSALM President and Chief Executive Officer Nieves L. Osorio.
"Getting the consent of the creditors to the sale of the Pantabangan-Masiway power facility less than a month after it was auctioned off last 08 September is a positive signal that PSALM is on the right track in the pursuit of our mandate," she said. "We sincerely appreciate the vote confidence of the creditors in our ongoing efforts to accelerate the privatization of the assets of National Power and prudently manage its liabilities."
The Asset Purchase Agreement for the Pantabangan-Masiway facility requires First Gen Hydro to deliver at least 40% of the purchase price as upfront payment payable on or before the closing date. The balance of 60% may be paid in 14 equal semi-annual payments with an interest of 12% per annum compounded semi-annually.
First Gen Hydro is also required to post a performance bond of USD2.58 million, equivalent to 2% of the purchase price. The performance bond will be reduced every year equivalent to 2% of the aggregate amount of the deferred payments.
In addition, the Lopez-owned company will be required to post a deferred payment security deposit equivalent to at least the next deferred payment in the form of cash, currently dated manager's check or an irrevocable standby letter of credit acceptable to PSALM.
With a bid of USD129 million, First Gen Hydro topped the USD112-million offer of SN Aboitiz Power Inc. for the Pantabangan-Masiway power complex.
Last 02 October, PSALM signed a memorandum of agreement (MOA) with the Protected Area Management Board (PAMB) for the utilization of the Masiway land in Sitio Masiway, Pantabangan, Nueva Ecija. The MOA will be assignable to First Gen Hydro, which will start paying for the use of the land as soon as the Pantabangan-Masiway facility is turned over to the company. These payments will be used by PAMB for the continued protection and maintenance of the area.
Strategic Communications and Partnership Division |