Biz Buzz: Round One to NGCP
A couple of weeks ago, officials of the Department of Energy and National Transmission Corp. (Transco) came out with guns blazing, accusing the privately-run National Grid Corporation of the Philippines (NGCP) of violating the terms of its contract by supposedly making too much money from its operations of the country’s electricity grid.
The allegations were so serious that Transco president Melvin Matibag went on record to say there were enough grounds to revoke the franchise Congress granted to NGCP in 2008 when the operations of the power grid was turned over to private hands.
But two weeks after an opening barrage … the guns suddenly fell silent. What happened?
According to Biz Buzz sources, DOE officials brought the issue to the attention of President Duterte during a recent Cabinet meeting and presented to the Chief Executive their findings about NGCP’s supposed shortcomings. The DOE team felt that the deal entered into by the government with NGCP almost a decade ago gave the private owners too much benefits to the detriment of the consumers. DOE’s ultimate plan? Nothing less than a “re-nationalization” of NGCP.
Here’s the thing though: It seems that the Cabinet wasn’t too enthusiastic about the plan.
According to one source, Executive Secretary Salvador Medialdea pointed out that, if indeed NGCP had violated the terms of its contract by profiting unduly from the operations of the power grid (allowing telecommunications firms to mount their fiber optic cables on the transmission towers, for example), the proper remedy would be for the government to dun NGCP for its share of the proceeds, and not cancel the deal.
And then the clincher: President Duterte himself, we’re told, pointed out that any move to regain control of the power grid from NGCP would be a costly and lengthy affair. How costly? NGCP today is worth almost $7 billion and that’s money the government would rather spend on improving the country’s infrastructure. Another issue? NGCP is 40-percent owned by the Chinese government-owned State Grid of China, making it the single-biggest Chinese investment in the Philippines. And no one wants to upset China nowadays, given the improving relations between both countries.
So it would appear that NGCP has won this particular battle. But, according to our DOE sources, the war goes on. Abangan. —DAXIM L. LUCAS
On a roll
Government appears to be on a roll in its efforts to improve tax collections. Recently, the Bureau of Internal Revenue (BIR) filed another criminal complaint against cigarette maker Mighty Corp. involving P26.9-billion in alleged tax deficiencies arising from counterfeit tax stamps affixed on its cigarette brands.
At the helm of the campaign is Finance Secretary Carlos Dominguez III—said to be one of President Duterte’s most trusted men. In less than a year in office, the no-nonsense finance chief and his aides at the BIR and Bureau of Customs have clamped down on Mighty, to the relief of its rival firm Philip Morris Fortune Tobacco Corp. (whose officials have complained that their protests against Mighty fell on deaf ears in the past).
Clamping down on tax evasion has, in fact, been the mission of Dominguez and his team from Day One, we’re told. So serious is the campaign that in recent days, the market has been abuzz with Mighty’s proposed settlement of its tax cases—a precondition, we are told, to a possible sale to a multinational tobacco firm.
But another kink that must be ironed out, Biz Buzz sources say, is that any tax settlement (and any acquisition by a third party) would only get the government’s nod if Mighty’s owners would agree to be bound by a “non-compete” deal and thus exit the industry altogether.
Mighty’s tax cases are currently in the preliminary investigation stage at the Department of Justice and how these would be resolved is a litmus test of sorts for the Duterte administration’s drive in pursuing tax cheats.
Naturally, industry observers, including tax reform and health advocates, are keeping a close watch on the case to see if government prosecutors share the zeal of President Duterte and Dominguez in pursuing tax offenders. We shall know soon enough. —DAXIM L. LUCAS
Breaking the deadlock
What enterprise wants more oversight into its industry business practices? Apparently, GMA Network does, when it comes to settling the long-running debate on who is the No. 1 TV network in the Philippines.
This is, of course, in reference to the ratings rivalry between GMA and the Lopez clan’s ABS-CBN Corp. Note that both companies use different third-party research firms to track people watching their shows in relation to their rivals. GMA uses Nielsen Audience TV Measurement while ABS-CBN uses Kantar Media. And while both issue monthly statistics deftly showing their lead in specific time slots and areas, urban versus nationwide figures, for example, there are overlaps and contradicting numbers sometimes emerge.
This is something GMA chair and CEO Felipe Gozon wants to resolve once and for all in calling for another third-party company to audit the two third-party firms. To be sure, this remains an issue that at times has defined the rivalry between the two TV giants.
Does it matter to consumers? Maybe not so much, except for the hardcore fans (you know who you are). Advertisers would definitely like to know. For the respective owners of GMA and ABS-CBN? That’s a given. Will this actually lead to anything? We don’t know.
As elegant a solution as it sounds, the plan is fraught with complications. For one, the cost of such an exercise is expected to be high. Would both networks agree to jointly shoulder this?
There’s also the selection of the independent auditor. And last but not least, both Nielsen and Kantar would need to open their systems to an audit. We’ve heard that Nielsen is OK with this. We’ve yet to hear back from Kantar. —MIGUEL R. CAMUS
Returning expat
After a stellar 23-year career at Dutch financial giant ING, Singapore-based Filipino banker/deal-making veteran Manuel “Manolet” Salak III has retired as ING’s clients coverage and corporate finance head in Asia.
Salak, formerly country head of ING Bank’s Manila branch until 2008 when he moved to Singapore to accept a regional post, decided to come back home after a nine-year overseas stint. But ING isn’t ready to let go of him as the bank tapped Salak as senior adviser to the Philippine ING office effective July 1.
“We are fortunate that Manolet has agreed to serve as senior adviser to our Manila branch, where we will continue to benefit from his strong client relationship network and his extensive commercial and investment banking experience. We express our deep institutional gratitude to him for his years of service, passion and dedication to ING,” said Gerrit Stoelinga, CEO of ING Wholesale Banking in Asia.
Salak, who is now 58, joined Baring Brothers Hong Kong in 1994 and moved to ING a year later when Barings was acquired by ING. As regional head of ING’s clients coverage and corporate finance since 2008, he provided senior banker coverage for Asian corporate clients, financial institutions and multinational corporations in ING’s Asian offices as well as for growing ING’s outbound activities to Europe. He also headed the corporate finance-M&A (merger and acquisition) and transaction services groups in Asia. He played an instrumental role in growing client numbers and revenues across Asia and served as a member of the Asia senior management team for almost 10 years.
With Salak boosting ING Philippines’ ranks, the mantra must be (close more) “deals, deals, deals.” —DORIS DUMLAO-ABADILLA
