Wednesday, June 21, 2017

TransCo to seek Palace nod to rescind or renegotiate NGCP concession deal

Published May 4, 2017, 10:01 PM By Myrna M. Velasco

State-run National Transmission Corporation (TransCo) is scheduled to secure the imprimatur of President Rodrigo Duterte to either rescind or renegotiate the 25-year Concession Agreement that the government had sealed with the National Grid Corporation of the Philippines (NGCP) following alleged contractual violations committed by the latter.
In a press conference, TransCo President and Chief Executive Officer Melvin A. Matibag laid down the string of NGCP’s offenses under the concession deal, albeit he emphasized that the last critical major trigger had been the alleged act of the concessionaire to engage in telecommunications business using the fiber optic cables (FOCs) linked to transmission assets without prior information to and consent of the government.
Meanwhile, in a counter statement to the media, NGCP Chief Administrative Officer Anthony L. Almeda noted that since the company “took over power transmission services in 2009, it has always been transparent with its operations.”
He said “it is unfortunate that the issue on the use of the fiber optic network for the national broadband program has been brought to the attention of the media by TransCo.”
Almeda added the company “does not earn anything from existing fiber optic facilities,” explaining that “the main purpose of the network is for the delivery of efficient power transmission services.”
While the parties are currently at odds on this issue, Almeda said “NGCP remains open to transactions with any entity who is interested to develop the national broadband network, with the national government as our priority.”
NGCP said, it is allowed to engage in related businesses such as the fiber optic business which maximizes the use of its existing assets as fiber optic assets are used by the grid primarily for its operations, substation to plant communication and substation to distribution center communications. Based on its franchise, NGCP added that, NGCP is authorized in ancillary business and any related business which maximizes utilization of its assets such as, but not limited to, telecommunications system, pursuant to section 20 of Republic Act No. 9136.
The meeting with President Duterte is slated in MalacaƱang on Monday (May 8), according to Matibag, and they are also hoping to present to a Cabinet meeting similarly scheduled that day in the Palace.
He explained that NGCP can engage in broadband or Internet connectivity business, however, it cannot just do so in the absence of the requisite functional unbundling of such business segments and without the prior written consent of the Power Sector Assets and Liabilities Management Corporation (PSALM) as stipulated under Section 8.03 of their Concession Agreement. PSALM is the government-entity that privatized the country’s transmission assets and also the counter-party in the concession pact.
“A project of this nature and magnitude requires a contract between the owner (TransCo) and NGCP,” Matibag stressed. Nevertheless, he indicated that “this was implemented without PSALM’s and TransCo’s knowledge or consent nor applied/petitioned with the Energy Regulatory Commission.”
For neglecting such processes and requirements, the TransCo chief executive noted that NGCP had been in patent violation of the provisions of the Electric Power Industry Reform Act (EPIRA) Law and the Concession Agreement.
Matibag qualified though that before any stern move on the part of the State to void the concession deal, they are still opening lines for “discussion with NGCP provided done in good faith on how they can work together” on using the transmission system’s fiber optic cables in the government’s broadband telecommunications project.
But if talks would fail, he asserted that the last resort will be for the government to “rescind the concession agreement” and revoke NGCP’s franchise or renegotiate its terms – and perhaps for the government to go through the process of arbitration although that will bear some costs on the State coffers. Filing of criminal and administrative charges are also part of the government’s plan.
Matibag recounted how the government has been consistently asking NGCP to provide them data on the fiber optics component of the transmission assets, but he said, it had been unheeded for some time.

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