Beginning with pure profit intent, the controversial Maharlika Investment Fund has metamorphosed into a “deemed national development tool,” with income now a secondary goal. So said Stephen CuUnjieng, investment banker and chairman of the Maharlika Investment Committee, during a recent FINEX forum.

Thus, moving away from its original gung-ho profit forecasts, the Maharlika Fund—capitalized at ₱127 billion from Land Bank of the Philippines, the Development Bank of the Philippines, and Philippine Amusement and Gaming Cop. (Pagcor)/government dividends—now carries a “transformative with multiplier positive effect” orientation. It is currently targeting a modest annual 10 percent Return on Equity (nominal, not leveraged).

Does this change in orientation make Maharlika content with a less than one percent ROE for 2025? From a portfolio perspective, it appears appeased.

The fund’s reach includes Agriculture, via a $1 billion partnership with Thailand's Charoen Pokphand Group Co. Ltd (aimed at modernization to enhance local food security); Extractive Mining, through a $76 million bridge loan for Makilala Mining Co. Inc. (targeting gold and copper in Kalinga); and, of course, Power.

The Philippines currently suffers from the most expensive power costs in Southeast Asia at $0.18/kWh, compared to Thailand ($0.13), Indonesia ($0.10), Vietnam ($0.08), and Malaysia ($0.03). One explanation for this disparity is that the Philippines and Thailand possess the least significant domestic oil sources among these five nations.

To illustrate how Vietnam has overtaken the Philippines economically: it utilizes 65 GW of power against the Philippines’ only 19 GW—more than triple the capacity.

Given its new orientation, Maharlika is betting big on energy. This includes a strategic collaboration with global expert ACWA Power to develop renewable energy projects for off-grid islands. It has also invested in Mindoro to upgrade its secondary transmission backbone and will deploy radar technology to assist Palawan—a major tourist destination—with its persistent power issues.

Maharlika’s biggest move, however, is its entry into the National Grid Corporation of the Philippines (NGCP) through Synergy Grid and Development Phils, Inc. By securing two of the 15 board seats, it gains 20 percent control. This move provides the government with an oversight tool for a security-sensitive business and allows it to participate in the delivery of “reliable and affordable” electricity.

Concerns have been raised regarding the 40 percent ownership of NGCP by the State Grid Corporation of China, which resulted in a Chinese national, Zhu Guanghao, serving as NGCP Chairman. However, NGCP assures the public that reliance on China is purely technical, and that the management and operation of the grid remain entirely Filipino.

In April 2023, the landmark Mindanao-Visayas Interconnection Project was activated. According to NGCP, the use of smart grid technologies has led to fewer outages and better energy source integration. Since 2009, NGCP has significantly reduced system interruptions nationwide, with the three major island groups now fully interconnected.

Furthermore, the NGCP transmission charge, which stood at ₱0.74/kWh under previous owners, is projected to drop to ₱0.4606/kWh by May 2025. This was achieved through a combination of wheeling and Ancillary Services (AS) reduction, cost optimization, improved market reserve management, and deferred payments.

Integrating renewable energy (hydro, solar, wind, etc.) into the grid is key to reducing both power costs and pollution. Renewables are forecasted to account for 35 percent of the energy mix by 2030 and 50 percent by 2050. According to Energy Monitor, solar power—which accounted for 15 percent of renewable sources in 2023—is expected to scale up to nearly 30 percent by 2035.

Speaking to Insider PH, energy expert Guido Delgado noted that there are 1,000 MW worth of solar projects requiring immediate grid connection. Delgado warns, however, that “NGCP's ability to construct and energize substations and transmission lines is stymied by delays in project approvals.” This bottleneck could be critical to the targeted transition.

The Department of Energy should tag winners of the Green Energy Auction Programs (GEAP) as “deemed completed” if they are ready for commissioning but lack transmission lines, allowing them to begin receiving payments.

NGCP should allow solar plants to build these connections themselves to eliminate “connection risk.”

Allow solar plants to finance the lines and substations, as current regulations prevent them from building their own once ERC approval is granted.

In sum, the transition to renewables is essential for making power accessible and affordable. Any move to hasten this shift makes Maharlika’s investment in NGCP fundamental, as it aligns with other shareholders to achieve a common objective: cheaper power. In that light, it is a strategic victory.