Wednesday, June 21, 2017

Biz Buzz: Round One to NGCP

Philippine Daily Inquirer / 01:16 AM May 17, 2017

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

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