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SPECIAL REPORT

‘Déjà vu’ as NGCP locks horns with energy execs

By: - Reporter / @daxinq
/ 04:01 AM May 03, 2017

Conclusion

For National Grid Corporation of the Philippines (NGCP)—the giant firm in charge of operating the country’s electricity grid —it seems that history is repeating itself.

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In 2010, not long after former President Aquino assumed office, it found itself on the receiving end of a tongue lashing from then Energy Secretary Rene Almendras about the firm’s supposed lack of transparency regarding the “true state” of the country’s power transmission system.

A few weeks later, the energy chief wrote NGCP president Henry Sy Jr. asking him to explain several issues regarding the company’s operations, especially those on its 25-year concession agreement with the government that it won in 2008 with a $3.95-billion bid.

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The dispute continued for several months, with the issue eventually dying down after a long tit-for-tat conducted both overtly in the media and covertly in meetings between policymakers, regulators and stakeholders.

Fast forward six years to today, a few months into the new administration of President Duterte and NGCP finds itself once more at loggerheads with energy officials, some of whom believe that the firm —controlled by an uneasy alliance of two Filipino businessmen and one of China’s biggest state-owned enterprises—is enjoying more benefits from the government than it should.

This time, NGCP’s nemesis is the newly appointed president of state-run National Transmission Corp., Melvin Matibag. Transco is, strictly speaking, still the owner of the power assets operated by NGCP although the government agency is no longer involved in the grid’s day-to-day activities.

Matibag is a longtime associate of Energy Secretary Alfonso Cusi.

“We don’t understand why this is happening, but it has happened to us before during the Aquino administration,” NGCP’s Sy told the Inquirer. “It went on until we were able to explain the situation to them, then they understood.”

The “situation” he spoke of is the perception that NGCP was making a killing on charging consumers for every kilowatt of electricity that passes through the grid from the power plant to the end user, when in fact, whatever the company makes is offset by the billions of pesos it has to spend in order to upgrade a nationwide transmission infrastructure that in some cases are five or six decades old.

“We invest a lot to make sure that power is delivered to the consumer, despite all the obstacles we face,” Sy said.

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Transco recently questioned NGCP why the latter supposedly allowed two telecommunications firms to hook up facilities to the power grid without having obtained the permission of the government agency— something NGCP denied.

Nonetheless, NGCP said that the congressional franchise it operates under authorizes it “to engage in ancillary businesses which maximizes utilization of its assets such as, but not limited to, telecommunications system, pursuant to Section 20 of Republic Act No. 9136,” or the Electric Power Industry Reform Act.

More importantly, the firm said that Transco could not interfere with its operations, saying that, since it took responsibility for operating the Philippine power grid almost a decade ago, the whole transmission system now operates as a “going concern” where NGCP “assumes all responsibilities as if it was the owner of the transmission assets.”

And for NGCP, that right includes the right to carry on any related businesses as long as it does not damage the assets.

It is a position that Transco’s Matibag is bound to contest over the coming days—a disagreement that will, if pushed to its logical end, may end up in the Singapore International Arbitration Center where business disputes of this nature are brought.

At stake is the nature of NGCP’s franchise, billions of dollars in private investment— including the single-biggest investment by a Chinese entity in the Philippines—the efficiency of the national power grid and, ultimately, millions of Filipino electricity consumers.

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TAGS: Energy, National Grid Corporation of the Philippines (NGCP)
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