MANILA, December 20, 2004 (STAR) By Jess Diaz - Sen. Joker Arroyo described yesterday as a scam the recent auction of the biggest plant of the National Power Corp. (Napocor) that is worth at least P28 billion.

He told The STAR that the supposed winning bidder of the 600-megawatt plant in Masinloc, Zambales — YNN Pacific Consortium, a Filipino-Australian entity that offered $561 million (P31.4 billion) — registered with the Securities and Exchange Commission (SEC) only six months before the bidding.

What is more questionable and anomalous is the fact that the winning bidder has a paid-up capital of P1 million only although its authorized capitalization is P10 million, Arroyo said.

"YNN has no employees, it has no foreign affiliate, no telephone, no fax, no corporate TIN (taxpayer’s identification number). That is what appears in YNN’s general information sheet filed with SEC. Its paid-up capital is only P1 million," he said.

Arroyo said YNN, in its submission to the SEC, listed its address as 1122 Dolmar Building in Paco, Manila.

"But the occupant of the place is not YNN. It is Forever Manpower Services Co. — another fraud and misrepresentation," he added.

Arroyo sits in the congressional energy commission that is empowered to oversee the sale of Napocor assets by the Power Sector Assets and Liabilities Management Corp. or PSALM.

He revealed that Napocor and PSALM are required to submit to the commission bidding documents for the Masinloc plant and any other Napocor asset that is up for auction.

The documents must be submitted before the bidding but have not been sent to the commission for scrutiny despite repeated demands, he said.

"What PSALM and Napocor say is, ‘trust us.’ Why should we? Even if we wanted to, the law and the rules do not allow it. The bidding documents must be known and filed with the power commission before the bidding," he added.

He noted that the two agencies is also pleading for trust on the question involving the capacity of the alleged winning bidder to pay the government the $561 million it offered for the Masinloc plant.

"We are told to trust them because YNN will file a $9 million bid security. But we are talking of $561 million — how will this be paid. We don’t know except the say-so of YNN," Arroyo said.

He said he learned that the winning bidder would just make a small down payment and then amortize the balance over several years with earnings from the Masinloc power plant.

"Samakatuwid, igigisa tayo sa sarili nating mantika (In other words, they will fry us in our own lard)," he stressed.

He noted that this small down payment-amortization scheme is also what Napocor, PSALM and Energy Secretary Vince Perez want to do with the National Transmission Corp. (Transco), which has inherited Napocor’s transmission lines and facilities.

During last Thursday’s hearing of the Senate energy committee on the sale of Napocor assets, PSALM president Perpetuo Lotilla said YNN Pacific Consortium was just a "special purpose vehicle" set up by Filipino and Australian investors to bid for the Masinloc plant.

Since they have won the bidding, these investors would now pool their money and look for financing here and abroad, he said.

Perez, who attended the hearing with Lotilla, said YNN will make a 40 percent down payment and pay the balance in installments over seven years with 12 percent interest.

He said the Masinloc plant will be turned over to YNN once it completes the 40 percent down payment.

Asked how much is the plant’s annual gross sales, both Perez and Lotilla could not provide an answer.

Requested yesterday to comment on what Lotilla told the energy committee, Arroyo said the PSALM official’s testimony confirmed his fears - that YNN has insufficient capital and will pay for Napocor’s biggest asset with earning from the plant.

"As for the special purpose vehicle, I don’t know what kind (of) animal this is. This is the first time I am hearing this. What we enacted is the special purpose asset vehicle or SPAV law, which is being used by banks to dispose of their idle assets. I am not sure if this is applicable in the sale of Napocor plants," he said.

Sen. Miriam Defensor Santiago, who chairs the energy committee, told journalists after Tuesday’s hearing that she was satisfied with Perez’s and Lotilla’s explanations.

Reported by: Sol Jose Vanzi

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