21 Feb 2007
I would like to thank President Gloria Macapagal Arroyo for accepting my resignation as PSALM president and chief executive officer and for giving me a chance to take a much needed break.
After almost two years at the helm of PSALM, I have decided to resign from my post after having accomplished major targets set by the corporation. The period saw some high and low points which I would not have handled without the unflagging support of a very professional and dedicated members of the management and staff of PSALM.
To the PSALM management and staff, I would like to express my sincere appreciation for they uncomplainingly spent long hours, without additional compensation, just to get the tasks done.
We have had our share of disappointments - such as the failed biddings for the 600-MW Masinloc and 600-MW Calaca coal-fired power plants, controversies on which our detractors feasted.
But these did not distract nor deter us from moving on to achieve what the law, the Electric Power Industry Reform Act of 2001, had mandated us to implement.
Amidst seemingly insurmountable challenges, we also had our share of successes which were achieved after a lot of patience and dedication were exacted from the PSALM staff as they have to painstakingly resolve intricate plant-specific and inter-agency issues. I personally believe the members of the PSALM staff deserve some recognition for their efforts.
We were able to collect the $14-million performance bond from YNN Pacific Consortium after they failed to deliver the upfront payment for Masinloc.
PSALM successfully bid out three major power facilities - the 112-MW Pantabangan-Masiway hydroelectric complex and the 360-MW Magat hydroelectric plant.
And the Philippine government was commensurately compensated. When the bids were opened, these plants fetched an aggregate price of $659 million, prices that were way beyond our own expectations. PSALM is proud to say that for these major transactions, there were no complaints as we have always exerted our utmost effort to keep our process fair, transparent and credible.
In 2006, we have created a cash flow of $673 million, which, as provided by EPIRA, will be used to pay the debts of the National Power Corporation.
All in all, we have brought the level of privatization from less than one percent in 2005 to 11% by yearend of 2006. Admittedly, we are still far from the EPIRA target of 70% privatization, but we have started to gain the much needed momentum.
Such progress would not have been achieved without the support of other government agencies, among them the National Irrigation Authority, the Office of the Government Corporate Counsel, and the Department of Environment and Natural Resources.
We also got a lot of support from our multilateral partners. Last year, the Asian Development Bank had granted its universal consent that would pave the way for the transfer of debts and assets of National Power to PSALM as mandated by the EPIRA.
The World Bank has informed us that it is now ready to grant the same omnibus consent. These consents are required before the government can complete the sale of any power facility which these multilateral lenders had funded in the past.
PSALM had laid down the groundwork for currency swaps which could provide hedges from forex fluctuations to National Power, whose debts are mostly denominated in US dollars and other foreign currencies.
We had successfully raised funds for the requirements of National Power, PSALM and Transco even as we continue to work on improving the financial conditions of these power agencies through implementation of the universal charges and liabilities management strategies.
I would like to take this occasion to dispel speculations that I have been forced to tender my resignation because of the outcome of the bidding for the 25-year concession of the National Transmission Commission.
As early as last year, I have made a personal commitment that I will finish this specific transaction. The final result may have not been up to PSALM's and the National Government's expectations or my own personal wishes. But this specific transaction has been completed.
We have done our best and despite some limitations - among them the absence of a congressional franchise for the future concessionaire - we have actually reached the bidding stage, crafted a transaction document on which we had a group of investors who were willing to take the risk with us.
Given such uncertainties, it is understandable that the earlier attempts in 2003 and 2004 to privatize Transco did not even go beyond the stage of submission of expressions of interest. Thus, while the February 5 bidding was not a complete success like the Pantabangan-Masiway and Magat biddings, neither was it a total defeat.
But we learned important lessons from that exercise. Transco's privatization is a complex transaction but the blueprint has been made. We at PSALM hope that in the next round of bidding, the prospective investors will be presented with better conditions, among them a congressional franchise. This will definitely help lessen the uncertainties and increase the value of the enterprise which in turn will provide higher proceeds for the National Government. In the end, it may be worth waiting for.
But this is now a new ball game and the next PSALM president is entitled to have a fresh start. I would like to exhort the members of the PSALM management and staff to extend the same support and dedication you gave me to the next PSALM president.
Given the intricacies of the government bureaucracy, civil service could sometimes be frustrating but the psychic rewards I got over the past 35 years were immeasurable. In the past, I could not think of myself working outside government service but I have long realized that I must eventually move on. That time is now.
I thank President Arroyo, PSALM Board Chairman and finance secretary Gary B. Teves, PSALM vice chair and energy secretary Raphael Lotilla and the other members of the PSALM Board - Secretaries Romulo Neri, Peter Favila, Raul Gonzales and Rolando Andaya - for giving me the chance to serve the Filpino nation as PSALM president.
Again, I would like to thank the PSALM management and staff for the fruitful and memorable time we had together. With the dedication you have demonstrated, I am confident that you all have a bright future ahead of you, whether you will choose to stay in civil service or eventually move to the private sector.
Strategic Communications and Partnership Division |