By Lenie Lectura - April 4, 2019
THE National Grid Corp. of the
Philippines (NGCP) on Wednesday laid down valid grounds to delay its planned
initial public offering (IPO), citing, among other reasons, public threats made
against its concession by state firm National Transmission Corp. (Transco).
“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.
“It thus makes no sense and would be
downright irresponsible for NGCP to proceed with the IPO and ask the public to
invest in a business the basic concession of which has been publicly threatened
by the government. NGCP cannot perpetrate a fraud against the investors,” the
grid operator said in a statement released during a public hearing presided by
Sen. Sherwin Gatchalian, Senate Committee on Energy chairman.
NGCP won the concession to operate
and manage the grid system in December 2007 for $3.95 billion. Transco still
owns the assets. It is only the NGCP that operates the country’s
power-transmission network for 25 years.
Under the law, NGCP should make a
public offering of the shares representing at least 20 percent of its
outstanding capital stock within 10 years from the commencement of its
operation, which was on January 15, 2009.
NGCP filed a petition for extension
for the listing of the shares; the petition is pending before the Energy
Regulatory Commission (ERC).
During the hearing on Wednesday, the
grid operator said the current market condition is not suitable for the listing
and public offering of its shares because of the absence of the final
determination of price-control arrangements from the ERC for the forth
regulatory period (2016-2020); the pending disputes among NGCP, Transco and the
PSALM which are now in arbitration; and the public threats made against NGCP’s
concession, whether these are raised in arbitration.
On February 14, 2018, NGCP filed
with the Singapore International Arbitration Centre a notice of arbitration
against PSALM and Transco. The case is still pending.
“As to the subject matter of this
Committee’s inquiry in aid of legislation, we wish to emphasize that NGCP is
not asking for an exemption to comply with the requirement to list its shares
of stock. NGCP intends to comply with the requirement of listing of shares.
NGCP simply asks for a reasonable extension of the period within which to do
so, as expressly allowed under Section 8 of its franchise [Republic Act 9511],
based on the ground that the market condition is not suitable for such
listing,” NGCP said
It explained the absence of the
final determination of price-control arrangements for the fourth Regulatory
Period prevents NGCP from having definitive base case financial projections for
an IPO, which are commonly required from NGCP in the proposals submitted by
various banks.
The final determination sets the
amount of revenues that NGCP will be allowed to recover from its consumers, the
amount of capital expenditures it can spend for its projects, and how much
operation expenses it can incur for the relevant regulatory period.
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