By Myrna M. Velasco
Foreign arbiters have been named by the National Grid Corporation of the Philippines (NGCP) and National Transmission Corporation (TransCo) on intended settlement of their dispute on the former’s R57.883 billion (US$1.1 billion) prepayment of concession fees (CF) in 2013, relative to the privatized power transmission assets of the country.
For NGCP, it named Yves Fortier as its arbitrator in the adjudication process, while TransCo has nominated Bridgette Stern as its representative.
It was NGCP that elevated the case for arbitral proceedings at the International Chamber of Commerce (ICC) in Singapore, according to TransCo president Melvin A. Matibag, but one that the government had willingly adhered to so they can finally have the CF prepayment wrangle sorted out.
The parties, he said, will still need to designate the chair of the arbitration panel; and each party will have to make their respective recommendation for such.
NGCP and TransCo first tried to fix prepayment skirmish through a dispute resolution, but they noted there were issues they were not able to resolve, such as computation and accounting concerns.
On TransCo’s part, Matibag noted that arbitration had always been a legal recourse that they have considered “just to show that the government, through TransCo, exercises every opportunity to show good faith in these issues.”
In a letter sent last January by another state-run firm Power Sector Assets and Liabilities Management Corporation (PSALM) to NGCP, it stipulated its Board’s decision to cancel the concession fee prepayment, “pursuant to Section 6.07 of the Concession Agreement and as confirmed by the Office of the Government Corporation Counsel (OGCC) in its Opinion No. 214, Series 2017 dated September 19, 2017.”
PSALM expounded that such had been in reference to the R3.9 billion worth of outstanding dues that NGCP had with TransCo at the time of its prepayment in 2013.
PSALM further informed NGCP that the submitted prepayment had been correspondingly applied to its amortization schedules on concession fees.
It stressed that “the deferred payment amortization schedule prior to the 15 July 2013 remittance would apply, such that, the maturities under the CA from January 2014 to January 2018 were settled using the R57.88-billion remittance of NGCP.”
The decision of PSALM and the OGCC, it was culled, had been hinged mainly on the prescription of the Commission on Audit (COA) that NGCP must have paid “its outstanding obligations first with TransCo” before its prepayment had been received by the government.
The State auditor primarily noted that in any event that the concessionaire-firm fails to settle the specified amount, necessary adjustments shall be done by taking off the amount first from the R57.883-billion NGCP concession fees prepayment.
The COA-proposed scheme would be to “deduct first its obligations with TransCo before crediting the balance to deferred concession fees.”
The specified TransCo receivables covered collections from power customers on connection and residual sub-transmission charges, primarily for calendar year 2007.
Another item represents collections of TransCo’s non-current power receivables that were taken out from the initial working capital (IWC) transferred to NGCP.
The customers which reported to have turned over such payments to NGCP include the Central Azucarera de Tarlac; National Irrigation Administration Region 2; NIA-MARIIS (Magat River Integrated Irrigation System – Cauayan District IV); Capiz Electric Cooperative Inc. (CAPELCO); and NIA-MARIIS District III.
Fraction of the required NGCP payments to the government-owned of the transmission assets would be cost adjustments relating to the decision of the Energy Regulatory Commission (ERC) on its allowable revenues under its third regulatory reset, encompassing right of way (ROW) capital expenditures and sub-transmission asset divestments prior to the turnover of the facilities to the concessionaire.