By Myrna M. Velasco
The government is seriously considering of buying shares during the mandated initial public offering (IPO) of concessionaire-firm National Grid Corporation of the Philippines (NGCP) to secure a seat in the company’s board.
Energy Secretary Alfonso G. Cusi (Source: https://www.bloomberg.com)
In an interview with reporters, Energy Secretary Alfonso G. Cusi indicated that if the NGCP tender offer should have happened as originally slated this January 2019, “the government would have purchased shares and we could have sat on the board.”
He qualified that shares acquisition “is an option that is available to the government and to all of us (the investing public).”
However, the plans got stalled because NGCP sought for an extension of its scheduled stock offering through a petition it lodged with the Energy Regulatory Commission.
Under Section 8 of the NGCP franchise (or under Republic Act 9511), it was given 10 years from January 15, 2009 to undertake the IPO covering at least 20 percent of its outstanding capital stock. That timeline should have lapsed January 14 this year.
It was further stipulated in the NGCP franchise that “in case compliance with this requirement is not reached, the ERC may, upon application of the grantee (in this case NGCP) and after notice and hearing, allow such reasonable extension of the period within which the grantee should list its shares of stock, if the market condition is not suitable for such listing.”
The transmission firm-concessionaire sought ERC’s imprimatur for an extension of the stocks listing mandate, citing the pending arbitration proceedings that it has against the Power Sector Assets and Liabilities Management Corporation (PSALM) and the National Transmission Corporation (TransCo) relative to the $1.1-billion concession fees prepayment it made in 2013.
The arbitration case is pending before the Singapore International Arbitration Centre – with the suit grounded on the provisions of NGCP’s Concession Agreement with the government.
Aside from the ongoing arbitration proceedings, NGCP also cited the delay on its fourth regulatory reset – or the adjustment on its tariff-setting under performance-based regulation (PBR) of the restructured electricity sector.
These factors, it claimed, could weigh heavily against any decision to pursue the IPO and may also pose risks to those investing on its offered shares.
Its filing with the ERC had been controverted by transmission asset-owner TransCo, with the state-run company manifesting that viable financial returns reaped by the concessionaire-firm over the years may have already sufficed as feasible justification on its stock offering.
The petitions of both companies are still awaiting decision by the power industry’s regulatory body, hence, NGCP’s stocks listing is not expected anytime soon.