Senator Risa Hontiveros on Thursday questioned the National Grid Corporation of the Philippines (NGCP) over its P448-million expenses on advertisements and entertainment, saying these should not be passed on to electricity consumers as these are not critical to power transmission operations.
“It was puzzling to see items such as advertisements, representation and entertainment in NGCP’s expenditures. Not only that, they also spent almost half a billion pesos on them,” Hontiveros said.
“Ano’ng kinalaman nito sa (How is this linked to power) transmission? Are these expenses critical part of their business?” she said.
At the continuation of the Senate’s probe on recent rotational blackouts in Metro Manila and other parts of the country, Hontiveros revealed that NGCP spent an accumulated amount of P369-million in representation and entertainment in 2017 and 2018; while P79-million was spent for advertising in the same time period.
The senator said she is skeptical if ordinary consumers are paying for these unnecessary amounts under the Energy Regulatory Commission’s (ERC) regulation.
“Were these expenses passed on to our consumers? I don’t think that’s fair,” she stated.
She said that while NGCP has been spending huge amounts on advertisement and entertainment, the country’s lone power grid has been negligent in getting the transmission development plan approved and failing to properly carry out grid improvement projects.
The senator also questioned the NGCP whether if it was able to successfully follow its Grid Development Plan considering there are at least 71 delayed and 83 unfinished transmission projects.
She had also revealed that NGCP’s shareholders have already divided among themselves a total of P187.8-billion in corporate dividends in just 10 years of their 25-year contract to run the country's power transmission system.
At the same time, Hontiveros issued an ultimatum to the ERC to act on the “anomalous and exorbitant” rate of the weighted average cost of capital (WACC) as these computations have been adding up to the consumer’s electricity bill for five long years.
She said the ERC has been remiss in lowering the WACC rates to fair and realistic levels since 2015.
“The ERC should have already acted on reducing the excessive WACC rate of 15 percent for NGCP and 14.97 percent for Meralco, which are way higher compared to the WACCs of Indonesia at 2.3%, Malaysia at 7.5 percent and Thailand at 7.2 percent,” she said.
“All the more that we should start the investigation on the cost structure of electricity in our country under the ERC and the failed promises of EPIRA (Electric Power Industry Reform Act) to reduce power costs,” she added.
Once it is proven that the NGCP failed to comply with the transmission development plan despite raking in profits through the WACC under the transmission charges, Hontiveros said the government should consider taking back the whole transmission sector of the power industry.
In the first place, she said the power industry’s transmission sector “should not have been privatized in the first place.”
“Taking back control of our main power grid system requires a system of strict oversight by the state. It also entails choosing the right people to manage the whole system,” she said.
“Abuses and corruption are not and should never be tolerated, whether you are from the private or public sector. Let's reclaim our interest in our national power grid,” the senator reiterated.