NGCP wants ‘settlement’ of ROW acquisitions at end of concession

Published May 14, 2017, 10:00 PM By Myrna M. Velasco

http://business.mb.com.ph/2017/05/14/ngcp-wants-settlement-of-row-acquisitions-at-end-of-concession/

Private concessionaire National Grid Corporation of the Philippines (NGCP) has communicated to government that it will just agree to account its project right-of-way (ROW) acquisitions by the end of its 25-year concession agreement with the National Transmission Corporation (TransCo) as underwritten by the privatization move of the Power Sector Assets and Liabilities Management Corporation (PSALM).

In a letter to PSALM and TransCo, NGCP President Henry T. Sy, Jr. stipulated that “transfer of title to the properties acquired by NGCP shall be made at the end of concession period,” with him citing Section 15.01 or the “Reversion Events” provision of their Concession Agreement.

He explained that specified CA proviso which lays the conditions for the eventual takeover of PSALM or its nominee-entity of the transmission assets, would cover “properties, documentary rights, intellectual properties, easement, or rights-of-way whose titles or ownership belong to, or in the name of TransCo.”

Sy, nevertheless, stipulated that such “may not extend to those properties/right-of-way acquired by NGCP under its own name pursuant to its power of eminent domain under the franchise.”

It must be noted that TransCo and PSALM earlier wrote NGCP and called its attention on the inventory of ROW acquisitions and having them titled under TransCo’s name.

NGCP, however, is disputing the government’s demand, stressing that “TransCo cannot ‘retain’ title over properties acquired by NGCP in its own name since these properties are not owned and not titled in TransCo’s name in the first place.”

Sy argued that Section 5.06 of the Concession Agreement speaks of two scenarios: “First, NGCP acquiring documentary property rights under its own name if granted eminent domain powers (which is claimed to be so under its franchise); and second, NGCP acquiring documentary property right in TransCo’s name as TransCo agent if NGCP is not granted eminent domain.”

The NGCP chief further indicated “it would appear that properties and rights acquired under NGCP’s own name as Concessionaire are not contemplated under Section 5.06, since this provision used the word ‘retain’.  Certainly, TransCo cannot ‘retain’ title over properties acquired by NGCP in its own name since these properties are not owned and not titled in TransCo’s name in the first place.”

TransCo President Melvin A. Matibag has yet to respond to NGCP’s official correspondence, but he already sounded off that the government would not agree to such interpretation of the CA’s provision as well as on the portended arrangement.

“That is not correct, because if you would look at the end of the concession agreement… that anytime, NGCP cannot own any portion or any asset that belongs to the government through TransCo,” he stressed.

Matibag said they shall contest that proposition because the cost of these ROW acquisitions may have already been part of the pass-on costs in the transmission charges applied for by NGCP at the course of its operations of the transmission assets.

“That can’t be the case – because in the end, there might be ‘double recovery,’ that may have already been inputted into their tariff…effectively, it’s the consumers who will be suffering from additional charges,” the TransCo chief executive added.

The government’s concession deal with NGCP kicked off January 2009 and will be culminating in year 2034 –way beyond the corporate life of privatization firm PSALM, hence, the turnover of assets may likely be bequeathed to another government entity.