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Sacrament of concession


Even after five long years since the government privatized the power transmission lines in the entire country, the private concessionaire —the National Grid Corporation of the Philippines, or NGCP—is still in the mood to spend a great deal of money.

According to recent reports, NGCP says that it is willing to remit in advance part of the concession fee to the government, amounting to between $1 billion and $2 billion.

At the same time, NGCP seems to be getting more aggressive in its capital investments in the transmission system.

In fact, the company still has pending applications with the government to upgrade various power lines and substations.

Back in 2008, the NGCP acquired the exclusive right to operate the power transmission lines of the government firm Transco, with a bid of almost $4 billion in concession fee, to be remitted to the government on a staggered basis.

But the Aquino (Part II) administration wants NGCP to prepay part of the remaining $2.7 billion in concession fee, since the government outfit PSALM, which manages the assets—and the huge debts—of Napocor, says it needs the funds now.

NGCP president Henry Sy Jr., known as Big Boy in business, who happens to be the eldest son and heir apparent of taipan Henry Sy—the richest man in the country today, according to Forbes magazine—recently told media that, yes, indeed, NGCP is willing to prepay a huge portion of the remaining $2.7 billion in concession fee.

The prepayment thus will be on top of the billions of pesos programmed by NGCP as capital investments in the country’s power transmission system.

Whew! Perhaps we can expect a more reliable power transmission system in the next couple of years—well, assuming of course that we have enough supply from the power generation sector?

From what I’ve heard, anyway, some applications of NGCP are still hanging before the Energy Regulatory Commission, or ERC, even for more major projects to address the increase in demand in certain areas, coming in particular from rural electric cooperatives.

In fact, by the end of 2013, NGCP is scheduled to complete new transmission lines, and complete the upgrading of a number of others, according to Big Boy Sy.

Sy said this in a speech at the recent annual general membership meeting of the Philippine Rural Electric Cooperative Associations Inc. (Philreca).

One of these projects is the Colon-Cebu transmission line that will benefit the people in Bohol and Panay Island, because it will reinforce the transmission backbone in Cebu that delivers power from the new coal plant there to the various electric cooperatives.

In particular, big users like the Visayan Electric Company (Veco), Mactan Enerzone Corporation, General Milling Corp. and the Waterfront Hotel and Casino will all benefit from the new NGCP transmission line.

Also due for completion by end 2013 is the so-called Balo-i-Villanueva-Maramag transmission line in Mindanao, which is the transmission backbone linking, finally, the northern and the southern parts of the island.

The overloaded transmission system in the southern part of Luzon is also undergoing a major upgrade, as NGCP increases the capacity of Lumban-Bay transmission line by four times, thus providing an alternate power highway in the fast growing areas in Batangas.

Here is good news to mining companies in Mindanao: NGCP will start soon the second circuit of the Butuan-Placer transmission project, serving the part of the island with huge mining operations paying billions of pesos in taxes to the government.

Also pending before the ERC are NGCP applications for the upgrade of the transmission system that will connect the various hydro power plants in Mindanao to the main grid, benefiting power distributors like Iligan Light and Power, plus of course heavy power users such as Mabuhay Vinyl, Treasure Steelworks and Platinum Group Metals Corp.

Question: Will those NGCP projects mean less power outages—or absolutely no brownout at all? At least the huge capital investments of NGCP will create stability in the power transmission system.

Whether or not NGCP has power to transmit, as I said, is another question.

Another matter of course is the problem of NGCP in its collection from customers, particularly the non-paying electric cooperatives, controlled basically by local politicians.

But then again, whoever said that any concession with the government is a walk in the park?

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