Business Mirror
Published on Sunday, 01 September 2013 18:15 Written by Lenie Lectura
THE SM Group—which is already engaged in power-transmission business—is reportedly interested to venture into the power-generation business, a top executive said last week.
“There are power generation, distribution...what we’re interested in is power generation,” said SM Investments Corp. Chief Financial Officer Jose Sio said.
The company official said the group wants to be sure if it can engage in both generation and transmission businesses without violating any laws.
“That’s the area that we want to resolve. We will see if it is appropriate, if it is legally feasible. What I’m saying is that these are the areas that were interested in. The SM Group [may look at this venture either] this year or next year,” Sio added.
If this proceeds as planned, the SM Group will join the Aboitiz group and the San Miguel Corp., among others, in the power-generation business.
Section 45 of the 2001 Electric Power Industry Reform Act that details cross ownership, market power abuse and anti-competitive behavior provides that no power-generation firm can hold an interest in the National Transmission Corp. (Transco) or its concessionaire. “No generation company, distribution utility, or its respective subsidiary or affiliate or stockholder or official of a generation company or distribution utility, or other entity engaged in generating and supplying electricity specified by [Energy Regulatory Commission] within the fourth civil degree of consanguinity or affinity, shall be allowed to hold any interest, directly or indirectly, in Transco or its concessionaire,” it said. “Likewise, the Transco, or its concessionaire or any of its stockholders or officials or any of their relatives within the fourth civil degree of consanguinity or affinity, shall not hold any interest, whether directly or indirectly, in any generation company or distribution utility,” the law said.
The SM Group, through the National Grid Corp. of the Philippines (NGCP), is into the power-transmission business.
NGCP took over the management and operation of the nationwide transmission system from the state-run Transco in 2009. Ownership of the transmission assets, however, remains with Transco.
NGCP is a privately owned corporation in charge of operating, maintaining and developing the country’s power grid. It transmits high-voltage electricity through “power superhighways” that include the interconnected system of transmission lines, towers, substations and related assets. Businessman Henry Sy Jr. is the president of NGCP.
Sy earlier told reporters that an initial public offering (IPO) is still in the company’s to-do list, although this won’t be happening soon.
“We were given 10 years to comply with that and I think we still have about six years to do that,” Sy said.
The NGCP is required to offer to the public at least 20 percent of its outstanding capital stock. Sy said this will happen only when the company is financially fit to undertake an IPO. source
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