Transco sale of grid assets breaches P4B mark

MANILA, Philippines—State-run National Transmission Corp. (Transco) has sold P4.08 billion worth of subtransmission assets to qualified power distribution utilities, since it began its privatization program in 2004.

As of April 30 this year, Transco has signed 83 sale contracts with 66 distribution utilities, electric cooperatives (ECs) or consortia, according to the 18th Status Report on Electric Power Industry Reform Act (Epira) Implementation.

Assets that were sold included an aggregate length of about 3,323 circuit-kilometers (ckm) of subtransmission lines and 30,200 subtransmission structures.

Of the 83 sale contracts, 36 accounted for an aggregate sales price of P1.88 billion and which had been approved by the Energy Regulatory Commission (ERC). The rest of the sale contracts, however, are still up for ERC filing, evaluation and approval.

The Epira implementation report detailed how Transco managed to extend concessional financing to electric cooperatives by entering into lease purchase agreements worth P2.9 billion.

The deals involved sale contracts with 50 ECs/consortia.

Under the Epira, subtransmission assets will be operated and maintained by Transco until their disposal to qualified distribution utilities (DUs). These utilities will take over the responsibility of operating, maintaining, upgrading and expanding the grid assets.

In cases where more than one distribution utility is connected to a transmission line, there is a need for the connected and qualified utilities to form a consortium to buy and operate the asset.

Transco’s subtransmission assets are made up of about 6,200 circuit-kilometers, comprising 69 kilovolt transmission lines and 1,600 megavolt amperes of substation capacity.

Estimated cost of these assets is about P7.6 billion based on 2007 net book values.

“The transfer of ownership and control of the subtransmission assets will enable distribution utilities to expand their operations, become more efficient, serve more customers and improve service,” Transco had said.

“National Grid Corp. of the Philippines (NGCP) would be able to focus on its core function—managing the operation and maintenance of high-voltage transmission system. Thus, the electricity consumers become the ultimate beneficiaries of Transco’s divestment program,” Transco added.

NGCP, which took over the Transco concession in January 2009, is the operator of the country’s electricity superhighway.

It has committed to ensure the safety, reliability and efficiency of the national power grid.