NGCP: Pending disputes with Transco, PSALM delay IPO

MANILA, Philippines — The National Grid Corporation of the Philippines (NGCP) on Wednesday blamed pending disputes with the National Transmission Corp. (Transco) and the Power Sector Assets Liabilities and Management (PSALM) for the delay of its initial public offering (IPO).

During a Senate energy committee hearing, NGCP spokesperson Cynthia Perez-Alabanza said the concession agreement of the NGCP was publicly threatened by Transco, particularly by its president Melvin Matibag.

“NGCP obviously took this public declaration seriously because it came from Atty. Matibag, the President of Transco himself,” Perez-Alabanza said during the hearing. “And to this very date, to NGCP’s knowledge, neither PSALM nor Transco has disowned or contradicted this public declaration.”

The NGCP official noted that it would be “downright irresponsible” for the NGCP to proceed with the IPO when its concession is publicly threatened.

“NGCP cannot perpetrate fraud against the investors,” she said.

In 2017, Matibag said the government rescinded the NGCP’s concession contract when the company did not inform the government of the communication facilities it set up.

The NGCP spokesperson said that the disputes among NGCP, Transco, and PSALM are currently in arbitration. Hence, the confidentiality of the arbitration proceeding prevents the disclosure of material information to investors.

NGCP Assistant Corporate Secretary on Special Counsel for Legal and Regulatory Affairs Ronald Concepcion affirmed that it would be a “great disservice to the public” if the company proceeds with the IPO when there is a threat to their concession agreement.

“The basic outcome of that arbitration would either result to probably rescission of the concession agreement and the revocation of our franchise,” Concepcion said.

“If the concession agreement is rescinded by the government, then we do not have any business to speak of. There is no public offering to speak of, there is no dispersal of assets to the public to speak of,” he added.

The NGCP also cited the absence of regulatory revenue for the 4th Regulatory Period (2016 to 2020) due to the delay of a regulatory reset, which prevents it from having a definitive base financial projections for an IPO.

“The lack of 4th regulatory reset is also a factor in our filing of the IPO extension. Without the regulatory reset, we cannot make a forward projection as to our future revenues,” Concepcion said.

“So in that case, the prospective investors will also not have a good idea of how NGCP will fare in the future,” he added.

Concepcion insisted that the deferment of the public offering of NGCP’s shares is because it is “not the right time to do it.”

“The question is not whether we are able to do it, the question is not whether the investing public will be willing to go into it,” NGCP Assistant Corporate Secretary on Special Counsel for Legal and Regulatory Affairs Ronald Concepcion said during a Senate hearing.

“The question, actually, is ‘is it the right time to do it?’ And we feel it is not the right time to do it,” he added.

The NGCP earlier filed a petition with the Energy Regulatory Commission (ERC) to defer its initial public offering (IPO) beyond the mandated period under its concession agreement with the government.

Under its petition, the NGCP asked ERC to defer the public offering of its shares for at least a year.

Under the NGCP’s charter, NGCP has 10 years from January 15, 2009 to comply with its statutory requirement to offer at least 20 percent of its outstanding capital stock to the public. /ee

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