The National Grid Corporation of the Philippines (NGCP) will be at stake of losing its franchise following a House leader’s disclosure on Thursday that he will soon petition to repeal its license to operate, citing alleged mounting violations and issues with its foreign ownership.
The NGCP faced the House committee on legislative franchises earlier this week after the panel learned that the corporation has multiple delayed projects, whose costs are purportedly being paid and passed on to consumers.
The recent hearing also highlighted Chinese nationals’ significant control over the corporation operating the country’s power grid and NGCP’s non-compliance with public share offer requirements, among other issues.
Santa Rosa Rep. Dan Fernandez disclosed that he will soon move to scrap the NGCP’s franchise, pending further violations that the panel will uncover in the subsequent hearings.
“I am for revocation [of the NGCP's franchise] and that's the reason why we are really piling up all their violations so that at the right time, we can make a motion to revoke their franchise,” he said in an interview. “That’s the best thing to do.”
The solon narrated that one of the primary concerns was the composition of the NGCP's board of directors. The board comprises 14 officials, including four Chinese, and is chaired by Zhu Guangchao, also a Chinese national.
Several lawmakers also questioned how Guangchao secured the highest position despite not representing most shares.
“The operations are conducted by the Chinese. And that is worrisome. The system operation should not be handled by a private entity, it should be handled by the Philippine government,” Fernandez asserted.
“This is one of the reasons why we are reviewing [this] so that the government can retain the [authority] to traffic the electricity again. Because aside from the fact that they are the ones who transmit the electricity from the generation power plant to the distribution utility, they bring it and they have control where it will go, and with that, we are compromising our security,” he explained.
The NGCP, a privately owned corporation that operates the country’s power grid, is partially owned by the Chinese. The State Grid Corporation of China (SGCC) holds a 40 percent share of the NGCP, while Synergy Grid of the Philippines (SGP) owns 60 percent pursuant to the 60 - 40 foreign ownership rule.
However, lawmakers expressed concern about two additional layers of subsidiaries under SGP, which may dilute Filipino ownership.
NGCP spokesperson Cynthia Alabanza, however, maintained that the presence of Chinese nationals on the country’s transmission board poses no threat to national security. She contended that Filipino board members still outnumber the Chinese.
Fernandez also contended that the NGCP breached Republic Act 9511, which mandates that the company offer at least 20 percent of its shares to the public within 10 years of commencing operations.
NGCP was granted a 50-year franchise under RA 9511, passed in 2008.
“Their franchise states in Section 8 that they must do an IPO or Initial Public Offering within 10 years from January 15, 2009 to January 14, 2019. NGCP’s share of at least 20 percent should be distributed to our constituents because they are a natural monopoly,” Fernandez stressed.
However, he lamented that NGCP made no legitimate public offering and instead resorted to “share swap methodology,” which was stated by the law.
He claimed that the NGCP had a private transaction with SGC, which is still owned by the same people who owned NGCP.
The panel will hold another hearing on Tuesday.