National greed
“Does it really matter how much money we make? Second of all, I don’t know when making money became so demonized.”
Thus said Cynthia Alabanza, assistant vice president and spokesperson of the National Grid Corp. of the Philippines (NGCP), after senators grilled her and other officials about the allegedly obscenely high dividend payments to its shareholders amid issues on the company’s performance and operations.
Alabanza argued: “Remittances [to state coffers], better services, lower prices, funding for the government. What else do you need?’’
She pointed out that transmission charges have gone down since they took over the NGCP following its privatization in 2009, that they remitted billions of pesos to the government, and that the Energy Regulatory Commission’s records would show that the NGCP’s services have improved.
Alabanza’s reaction followed revelations during a hearing Wednesday last week of the Senate energy committee on the amounts that have been given as dividends to NGCP’s private shareholders. The Senate’s investigation was prompted by several senators’ call for the government to retake control of the NGCP from the State Grid Corp. of China over fears this could jeopardize Philippine national security amid the territorial dispute with China over the West Philippine Sea.
The NGCP, which has a 25-year concession contract and a 50-year franchise to operate the country’s lone power grid, is 40 percent owned by China’s state-controlled grid company. The remaining 60 percent is equally divided between tycoon Henry Sy Jr. and businessman Robert Coyiuto Jr.
Quizzed by Sen. Raffy Tulfo, NGCP assistant corporate secretary Ronald Dylan Concepcion disclosed that the company earned more than P20 billion in 2019, and gave P15 billion of this to its shareholders as dividends. He added that NGCP shared among its owners P19 billion out of its earnings of P20.6 billion in 2017, and another P21 billion from its income of P22.5 billion in 2015. In 2014, he said the consortium distributed P24 billion to its shareholders after declaring a net income of P22 billion. The dividends were bigger than the net profit because these were actually taken from “retained earnings which have accumulated over the years,” Alabanza explained.
The NGCP official is partly correct. There is nothing wrong with making profits out of a business. That is the objective of every company in the capitalist system. But putting the amounts that have been given to NGCP owners as dividends next to Sen. Sherwin Gatchalian’s issues against the company, something is wrong with Alabanza’s arguments.
Gatchalian filed on May 17 Senate Resolution No. 6161 seeking an inquiry into the delayed implementation of 16 NGCP undertakings considered to be energy projects of national significance (EPNS). Gatchalian did not hide his dismay over the supposed delay, some extending to as long as five years, pointing out that only six of the EPNS, or 37 percent, have been completed as of March 2023. What is worse, according to the lawmaker, is that NGCP is already collecting payment for the projects that consumers have yet to see.
Out of 168 projects that NGCP is required to undertake, only 30 were completed while 138 were delayed, Gatchalian also noted. Among the projects he cited are the Mindanao-Visayas interconnection project, which will enable the country to have one grid, that was supposed to be completed in December 2020, and the Cebu-Negros-Panay 230 kilovolts backbone stage 3 project, which would have increased electricity transfer capacity from 200 megawatts to 800 megawatts had it been completed as scheduled in 2019.
The NGCP cannot always blame right-of-way issues, or problems in dealing with local government units. The NGCP should exert more effort on its own in resolving problems delaying its mandated projects, and not rely solely on the national government for solutions to them.
As Gatchalian had stressed, “The delay causes a multilayered impact. When we talk about attracting investments into the country, the power supply is a fundamental consideration. How can we attract investors if we don’t have adequate supply and if it’s too costly?”
As the sole backbone for the transmission of electricity throughout the country, he continued, “NGCP is duty bound in ensuring that it can adequately serve generation companies, distribution utilities, and suppliers requiring transmission and ancillary services through transmission system.”
NGCP should be reminded of the recent case of the two water concessionaires, whose filing of billions of pesos in claims against the government despite their poor service riled then-President Rodrigo Duterte, which eventually led to new concession contracts that are now more beneficial to consumers.
Perhaps it’s time to do the same in NGCP’s concession agreement, which Energy Undersecretary Sharon Garin had previously described as “overly generous” and “very much in favor of the franchisee.”
