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IPO denial holds back P4B

It is mandated to offer 20 percent of the corporation to the public after 10 years in operation.

Keith A. Calayag

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National Transmission Corp. (Transco) president and chief executive officer Melvin Matibag

The Filipino people and the government are deprived of a total of P4 billion a year as electricity network operator National Grid Corp. of the Philippines (NGCP) stubbornly refuses to comply with its mandate to hold an initial public offering (IPO).

In an interview by Daily Tribune, National Transmission Corp. (Transco) president and chief executive officer Melvin Matibag stressed that the NGCP’s IPO is mandated under the Electric Power Industry Reform Act (EPIRA) of 2001, or Republic Act (RA) 9136.

Matibag added NGCP is obliged under the EPIRA Law and the concession agreement to go public 10 years after starting its operation in 2009 by virtue of RA 9511.

“The NGCP is earning about P20 billion in cash dividends annually. If you get 20 percent of that, that is P4 billion and that should have been the share of the public or the government if they had the IPO,” Matibag told Daily Tribune.

Apparently, the NGCP is mandated to offer 20 percent of the corporation to the public after 10 years in operation.

“They (NGCP) should not solely get the cash dividends. It should be opened to the public,” he explained.

Based on the law, NGCP should have held its IPO last January.

According to the official, Transco already petitioned the Energy Regulatory Commission (ERC) to force the NGCP to hold an IPO but the move was junked.
He said the ERC ruled that Transco has no authority to initiate such a move.

“The ERC dismissed it because they said we (Transco) have no legal standing which is ridiculous because even an ordinary taxpayer has a stand to intervene, what more the owner which is Transco,” Matibag pointed out.

Transco, which owns the facilities being operated by NGCP, is mandated to monitor the compliance of NGCP to the EPIRA Law and the concession agreement.

“We have to monitor their compliance to the law and the contract,” he stressed.

Matibag said Transco filed a motion for reconsideration before the ERC, which is yet to make a ruling.

Meantime, he welcomed the move of the House of Representatives to conduct an inquiry into the delayed IPO of NGCP.

“We are now waiting for the MR (motion for reconsideration) and we’re hoping that Congress will call for an investigation,” he said.

Contacted by Daily Tribune, PBA partylist Rep. Jericho Nograles said the House Committee on Energy will hold another hearing on the matter when session resumes next month.

Warning issued

Last month, the House Committee already warned the NGCP of its failure to conduct an IPO as mandated.

During that hearing, Nograles, who is the committee vice chairman, stressed that apart from the delayed IPO of NGCP, some lawmakers have raised concerns over the significant drop in tax collections from its operation since it was privatized.

“Therefore, the committee resolved to invite NGCP again to clarify these questions as soon as session resumes,” Nograles told Daily Tribune.

On the motion of NGCP to further delay the IPO, Matibag said only Congress has the authority to grant it and not ERC, where NGCP supposedly filed its petition.

“My position is that ERC has no authority to extend it… It should be the Congress,” Matibag said.

The Transco chief maintained that apart from the deprivation of the public and the government to invest at NGCP, the delayed IPO also dispossesses transparency.

“More than that (deprivation to invest) is the ability of the government to know what is happening. Right now, there is no public or government representation,” Matibag lamented.

Full electric service pushed

Department of Energy (DoE) Secretary Alfonso Cusi, meanwhile, said during a Senate hearing on the DoE’s proposed budget that the electrification program of the government was somehow derailed by the inefficiency of cooperatives in the unserved or underserved areas.

“The problem in Mindanao is no longer a supply problem. It is the distribution problem, the transmission and distribution problem. We must understand that electricity is all in the hands of the private sector, the transmission is with NGCP (National Grid Corporation of the Philippines) and the distribution is with the utilities and the cooperatives,” Cusi explained.

The Energy Secretary further said the DoE was pushing the cooperatives and other utilities to do their job, otherwise they will be asked to give up their franchise approved by Congress.

Cusi mentioned that he was already declared persona non grata by the cooperatives’ association for revoking their franchises due to their underperformance.

But Sen. Juan Miguel Zubiri said the DoE must also give a solution to help these cooperatives perform their duties well as they were not like multibillion electric companies that could provide funds for the upgrade of their facilities.

Cusi said the DoE provides subsidies for depressed areas and they assured the panel that they will help the government in addressing insurgency by monitoring the master plan of cooperatives who are authorized to provide electricity in their respective areas.

“The objective of the DoE is that the entire country will be covered by franchises to curb out the underserved and unserved. We are inviting the microgrid and mini-grid. We have asked the cooperatives (to provide) a master plan of all franchise areas so in that way we can see their plans,” he added.

He said the underutilization of funds was due to previous year’s problem on accountability and liquidation.

“When we released money under the NIHE program of the department, we had this problem, we cannot release money without proper accountability. When we are auditing this, we found out that some included in the plan are vacant lots so we cannot continue doing that,” Cusi justified.

“This is the money of the people that is being used in the electrification program in support for the electrification of the entire country. What we have done in 2018 and the 2019 we changed the system. We allocated the fund in a way we use the money not just in NIHE but even in microgrid and mini-grid,” he added. “That’s what we are doing right now we are changing the system.”

Cusi, in a separate ambush interview, said they are currently into 96 percent of the electrification program and they are still on track with President Rodrigo Duterte’s vision to provide 100 percent electrification before his term ends in 2022.

SC ruling favors consumers

The Supreme Court (SC), during an en banc session on 8 October and in a decision penned by Senior Justice Antonio T. Carpio, voided the adoption by the Energy Regulatory Commission (ERC) of the current or replacement cost in the valuation of Manila Electric Company (MERALCO)’s regulatory asset base.

In the case of National Association of Electricity Consumers for Reforms, Inc., vs. Energy Regulatory Commission, et al. (GR 226443), the SC partially granted the National Association of Electricity Consumers for Reforms’ (NASECORE) petition and remanded the case to the ERC to determine the valuation of MERALCO’s regulatory asset base, as well as the parameters whether expenses that are not directly and entirely related to the operation of a distribution utility shall be passed on wholly or partially to the consumers, in order that electricity shall be provided to consumers “in the least cost.”

With Hananeel Bordey and Mario J. Mallari

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