PIMENTEL QUESTIONS P10 MILLION BONUS TO PSALM EXECS FOR FLAWED MASINLOC PLANT SALE

Senate Minority Leader Aquilino Nene Q. Pimentel, Jr. (PDP-Laban) today accused officials of a government corporation in the power sector of committing an unethical and illegal practice by rewarding themselves a P10 million bonus for the sale of the 600-megawatt power plant in Masinloc, Zambales two years ago to a Filipino-Australian consortium which turned sour.

Pimentel said the executives of the Power Sector Assets and Liabilities Management (PSALM) Corporation stepped beyond the bounds of the law and norms of decency when they granted themselves the fat cash incentive using the privatization of the Masinloc plant, and five other power plants as basis.

He said the grant of the bonus could not, by any means, be justified under the circumstances since the awarding of the sale of the Masinloc plant to the YNN Pacific Consortium in December, 2004 was being questioned at that time by members of Congress and stakeholders in the power industry due to the dubious credentials of the winning bidder.

In fact, Pimentel said he and other legislators had called for the immediate suspension or cancellation of the awarding of the sale contract to YNN Pacific Consortium after it was discovered that it was grossly undercapitalized with a paid-up capital of only P600,000 and was operating in a nondescript office in Binondo, Manila.

Noting that the Commission on Audit (COA) disapproved the grant of the P10 million bonus to PSALM officials, Pimentel called for a congressional inquiry into what is obviously a patently illegal use of public funds for the benefit of functionaries whose handling of the Masinloc deal does not warrant the granting of the monetary reward.

I am asking the congressional oversight committee on power and the Senate blue ribbon committee to look into the grant of the P10 million bonus to PSALM officials on the basis of the flawed Masinloc deal, the minority leader said.

Despite the doubtful financial and technical capability of YNN Pacific, it won the bidding to acquire the Masinloc plant for $561 million or P30 billion.

Under the contract, the winning bidder was required to pay an upfront fee of $220 million on or before Dec. 20, 2005. Failure to do so would result in automatic forfeiture of the companys performance bond of $11 million.

But when YNN Pacific reneged on the payment of the $227 million by deadline time, PSALM extended the payment period. Unmindful of the breach of the terms of the contract, PSALM extended the deadline of payment for the second time from March, 2006 to June 30, 2006 although increasing the companys performance bond to P14 million.

Why PSALM has not cancelled the power purchase contract is big mystery. It is also a blatant disregard of its duty to protect government interest and enforce the terms and conditions of the contract, for which they may be held liable under existing anti-graft and ethical standards laws, Pimentel said.

Official records showed that PSALM on Dec. 28, 2004 issued a Circular No. 2004-026 setting aside the amount of P10 million to recognize and equitably compensate the extraordinary performance of PSALM officials.

But the COA subsequently ruled that the grant of the bonus has no legal basis and was not justified because the accomplishments cited by PSALM were considered very far from being extraordinary.

Furthermore, COA said the monetary reward was in violation of section 3 (b) of Administrative Order 103, issued by President Gloria Macapagal-Arroyo, which provides that All government owned or controlled corporations, whether exempt from the salary standardization law or not, are hereby directed to suspend the grant of new or additional benefit to full-time officials and employees.