First investment: Gov’t, through Maharlika, gets 20% stake in NGCP

MANILA, Philippines — The Maharlika Investment Fund (MIF) is buying a 20-percent stake in the National Grid Corporation of the Philippines (NGCP), the private company operating the country’s lone electricity transmission network.

President Marcos witnessed the signing ceremony in Malacañang on Monday afternoon between Maharlika Investment Corp. (MIC), the manager of the country’s first sovereign wealth fund, and Synergy Grid and Development Philippines Inc. (SGP), which holds a 40-percent interest in NGCP.

“Congratulations, everyone. I know it wasn’t easy. I think, in the end, we found a good solution to everyone’s concern,” President Marcos said, addressing MIC and NGCP executives.

READ: NGCP admits Chinese national once held executive position

The agreement was signed by MIC president and chief executive officer Rafael Consing Jr. and SGP chair Henry Sy Jr.

The venture into NGCP is the maiden investment for MIC, which is mandated to manage the Maharlika fund through various business engagements but has been criticized for failing to land a major business activity since its inception in July 2023.

Created under Republic Act No. 11954, MIF is facing a legal challenge before the Supreme Court for supposedly being unconstitutional, with petitioners alleging that the law entrusts billions of pesos in public funds in the hands of unknown fund managers and an “amorphous nine-member board of directors.”

P30-B value

In a text message to the Inquirer, Finance Secretary Ralph Recto said the investment of MIC in NGCP involved the former’s purchase of preferred shares with voting rights priced at P15 apiece.

Maharlika will make an upfront payment of about P20 billion for the stocks, he said.

This, in turn, will not only give MIC seats on the board but also enjoy an attractive dividend rate of 6.5 percent, higher than the current yields that an investor can earn from government bonds.

According to Recto, MIC may convert the preferred stocks into common shares later on at a conversion price of P22.50 each.

Including the conversion option, the finance chief, who also serves as chair of MIC, said the investment deal is “prospectively” valued at P30 billion.

“Those resources will be used to improve the grid,” Recto noted.

With the deal, MIC will be given two board seats each at SGP and NGCP, according to Consing.

“Once the acquisition is completed, we shall be entitled to two out of nine seats in the SGP board, after the total seats are increased from seven to nine,” he said.

“At NGCP, the government gains representation through two out of 15 board seats, following an increase in the total seats from 10 to 15,” Consing added.

Better coordination

He said MIC would send a disclosure to the Philippine Stock Exchange today to provide the market with more details.

According to Consing, the MIC investment will safeguard the nation’s power supply from external threats and disruptions, citing the need for the government to have a say in NGCP decisions.

NGCP is facing scrutiny at a House investigation over concerns about the composition of its board, mainly the presence of representatives of the Chinese government, which owns 40 percent of the company.

Lawmakers said they would look into NGCP’s 50-year franchise with the possibility of revocation.

It was granted a 25-year concession in 2007 to operate the transmission system, with the possibility of renewal for an additional 25 years.

The Department of Energy (DOE), meanwhile, said MIC’s investment in NGCP could help avoid delays in undertaking transmission projects, facilities that are vital for delivering electricity from power plants to consumers.

It would also pave the way for better coordination between the DOE and NGCP to help expand transmission connections on time and speed up the interconnection of the power grid across the archipelago.

“Government investment in transmission would make additional capital available for NGCP to deploy in the pursuit of completing transmission projects on time,” the DOE said in a statement on Monday.

“If these transmission facilities are delayed or their completion dates keep on moving, new generation plants will also be delayed, or they will be left stranded or unused even if ready to operate,” it added.

According to the agency, delays in completing transmission projects can increase not only the risk of power outages but also drive up electricity prices as well as cause significant damage to the economy.

The DOE also said this was another step toward energy security while supporting the country’s economic growth.

“This is a step toward attaining our goal of ensuring [the] security of supply, reliability, affordability, and promoting competition in the power sector,” Energy Secretary Raphael Lotilla said. —with a report from Jordeene B. Lagare

(2025/01/28-05:25)