ERC told to issue ultimatum on NGCP’s IPO requirement

By Butch Fernandez November 2, 2020
https://businessmirror.com.ph/2020/11/02/erc-told-to-issue-ultimatum-on-ngcps-ipo-requirement/

The chairman of the Senate Energy Committee prodded the Energy Regulatory Commission (ERC) to “issue an ultimatum” on the National Grid Corporation of the Philippines (NGCP) to list its shares of stock in compliance with its franchise as the country’s transmission system operator.

Senator Sherwin T. Gatchalian issued the reminder after the NGCP filed another motion for reconsideration to extend the deadline on its compliance in the initial public offering (IPO) requirement after the ERC denied the company’s earlier petition and issued a decision in April 17 that NGCP should commence immediately the process of public listing and submit a compliance report.

The Senator reminded the ERC that such requirement on two intervenors will lapse on October 31, even as the ERC has yet to receive comments from the National Transmission Commission Corp. (Transco) and the Power Sector Assets and Liabilities Management Corp. (PSALM) on NGCP’s motion for reconsideration.

Gatchalian conveyed his misgivings over NGCP’s inaction on the matter as there is no showing that the grid operator will comply with the requirement to list its shares of stock.

“The resolution is absolute. Within six months NGCP should be conducting an IPO but I’m very sure that’s not going to happen. So if that will not happen what is the recourse?” Gatchalian asked.

The lawmaker recalled that based on the franchise law, ERC Chairperson Agnes Devanadera said the NGCP has two options to satisfy the IPO requirement of the franchise, one is the public listing and the other is the listing of a holding company.

Given that the franchise imposes obligations on NGCP as the operator of the transmission grid, Gatchalian pointed out that there will be corresponding penalties and fines that could be slapped against the company for failing to comply with the ERC order.

Gatchalian noted that “it is clear in their franchise that they should be offering its shares to the public,” adding that that the NGCP’s delay in issuing the IPO has already been two years.

In a statement, the Senator stressed the significance of undertaking an IPO, especially in the case of NGCP which manages the government’s transmission assets, saying: “I would like to again stress that the system operator should comply and this is part of the governance mechanism to get the public involved. When the public is involved, then there’s more transparency. Shareholders demand accountability.”

In a statement released during a public hearing presided by Gatchalian in April 2019, NGCP cited the grounds for delaying its planned IPO, citing, among others, public made against its concession by Transco (see “NGCP delays planned IPO,” BusinessMirror, April 4, 2019).

“The entire business of NGCP is founded on the concession agreement, which has been publicly threatened by Transco’s president, Melvin Matibag. NGCP obviously took this public declaration seriously because it came from Attorney Matibag, the president of Transco himself, and that to this very date, to NGCP’s knowledge, neither PSALM [Power Sector Assets and Liabilities Management Corp.] nor Transco has disowned or contradicted this public declaration.