January 28, 2019 | 12:06 am By Victor V. Saulon Sub-editor
STATE-LED National
Transmission Corp. (TransCo) is asking the regulator to deny the petition of
privately owned National Grid Corp. of the Philippines (NGCP) to defer its
initial public offering (IPO), saying the grid operator should not be allowed
to benefit from its decade-long inaction on the provisions of its franchise.
In its opposition and
comment sent to the Energy Regulatory Commission (ERC), TransCo enumerated six
reasons for opposing NGCP’s petition, including the latter’s filing for an
extension only two months before the expiration of the 10-year period on Jan.
14, 2019.
“It provides no
explanation or justification why it waited until almost the very end of the
stipulated compliance period to formally request the ERC for an extension. By
the beginning of 2018, NGCP possess all the financial indicators necessary to
make an assessment on whether it can pursue its IPO within the last year,”
TransCo said.
NGCP has filed a
petition seeking to defer the public listing of its shares as mandated by
Section 8 of its charter, Republic Act No. 9511, which was signed into law on
Dec. 1, 2008. NGCP had 10 years from Jan. 15, 2009 to comply with the statutory
requirement to make a public offering of at least 20% of its outstanding
capital stock.
TransCo is the state
company that owns the country’s transmission network, which is being used by
NGCP for its function as grid operator.
TransCo’s filing is
dated Dec. 20, 2018 and was sent to reporters over the weekend after Energy
Secretary Alfonso G. Cusi said last week that he had asked Melvin A. Matibag,
the company president and chief executive officer, for a copy of the opposition
filed with the ERC.
Mr. Cusi said he wanted
the government to buy a stake in NGCP.
TransCo also questioned
NGCP’s contention that the pending arbitration case between the two would have
an effect on the timing of the IPO.
“The pending
arbitration case is not a valid ground to defer NGCP’s obligation to go
public,” TransCo said, referring to the move by the private company to raise a
separate dispute against the Power Sector Assets and Liabilities Management
Corp. (PSALM) and TransCo before the Singapore International Arbitration
Centre.
Aside from this claim
being “unfounded and unsubstantiated,” NGCP also failed to present a valuation
report from a “reputable independent valuation firm,” TransCo said.
In addition, TransCo
opposed NGCP’s claim that the absence of the ERC’s approval for the period from
2016 to 2020 due to the deferred regulatory reset might affect the company’s
valuation.
“The regulatory reset
is not a condition sine qua non for NGCP to offer its shares to the public,”
TransCo said.
The state company also
said the period for compliance with Section 8 of RA 9511 is mandatory and
self-executing.
TransCo said NGCP was
taking a self-serving position that the decision to make a public offering of
its shares and all the preparatory activities are subject to the discretion of
the board of directors.
“Business judgment rule
is subservient to the constitutional requirement of equity participation in
public utilities by the general public,” TransCo said.
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