1 month ago
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Like a high voltage shock, the 20 percent shares sell-down of the National Grid Corporation of the Philippines, via parent firm Synergy Grid and Development Philippines, Inc., sent the entire industry reeling last week, and The missing piece of the puzzle had been: what covert forces were at play behind the scenes to set this ‘authority flex’ in motion?
A highly placed insider revealed that before the power sector tremors, two draft Executive Orders (EOs) landed on NGCP’s hand – an unmistakable signal that the government was gearing up to tighten its grip on the power grid and that would not just simply solidify State oversight but also manifests who gets to wield real power in the country’s energy game.
During the announcement of Maharlika Investment Corporation’s (MIC) shares acquisition, President Marcos subtly acknowledged the turbulent negotiations, dropping a cryptic hint at what could have been an intense backroom battle when he remarked, “I know it wasn’t easy, but in the end, we found a good solution to everyone’s concern.”
Behind closed doors: EOs of dissent
Documents obtained by Manila Bulletin exposed some game-changing narratives - the first EO mapped out the government’s strategy to bring in a ‘third-party contractor’ to accelerate priority transmission projects, a clear indicator that the government, through the recommendation of the Department of Energy, is out to rewrite and reshape the transmission sector’s investment in a ‘reverse privatization’ playbook.
The draft EO laid it out bluntly: transmission projects deemed critical by the DOE won’t just wait in line— they could be handed over to a third-party contractor to break ground and get the job done, as stated in this wise: “transmission facilities that are identified by the DOE as priority transmission projects may be constructed by a priority third party contractor,” adding that “the DOE, in consultation with the ERC, shall formulate the rules and regulations, in authorizing any entity to act as a priority third party contractor.”
That particular EO reportedly struck a nerve with NGCP, igniting strong dissent from the grid operator which also essentially cautioned government that such maneuver could trigger protracted legal showdown - one that may paralyze the entire industry, leaving critical transmission projects in limbo and the country’s energy future hanging by a thread.
As legal storm clouds gathered over the first EO, the second draft Presidential mandate threw another blow into the power sector - this time, shifting the financial burden of grid connection facilities onto power generation companies (GenCos) and distribution utilities (DUs). But what the government framed as policy reform, the industry saw as a financial ambush, precipitating fierce resistance from the very players expected to shoulder the cost.
Industry insiders sounded the alarm to the DOE and the Office of the President, highlighting that such solution isn’t just impractical but a financial stranglehold - one that could choke investment and destabilize the sector. With the ERC’s notoriously sluggish approval of cost recoveries, power firms feared being caught in a bureaucratic gridlock - where capital sunk into grid connections could remain tied up for years, and that will just fuel deeper market uncertainties.
That specific draft EO stipulated that: “The DOE, in coordination with TransCo, may authorize any qualified entity to finance, construct and install lines, substation equipment and other facilities that shall become part of the grid or power system,” detailing further that “such qualified entity shall either be generation companies or distribution utilities requiring facilities to serve their load or power delivery requirements, to connect or synchronize to the grid.”
With both solutions shot down by NGCP and the broader industry, and with the government still bent on securing its hold over power system operations, the MIC investment emerged as the State’s ultimate strategic power move.
The end is near… for the concession agreement
As MIC muscles its way into NGCP’s boardroom and control center, a storm of uncertainty weighs down the industry and Filipino consumers alike: will this investment realignment finally bring the long-promised rate cuts, or is the much-hyped refund from the ERC’s delayed reset just another illusion - fading into yet another cycle of unmet promises?
Some quarters argue that MIC’s focus might be on validating its SGP preferred shares acquisition as a profitable venture for the State’s coffers, leaving the reduction of NGCP rates as a secondary concern - if it even truly registers on their radar at all.
And as the final hours of NGCP’s 25-year concession agreement tick away, with only nine years left, industry players are raising red flag questions: with ERC’s proposed shift from performance-based regulation (PBR) to return on rate base (RORB) post-project, can NGCP realistically gamble on new investments given very long gestation period for transmission projects; or will the changing regulatory regime turn such ventures into high-risk bets? And will MIC be NGCP’s golden ticket to securing a smoother path for extending its concession deal?
Buckle up for wild twists, gut-wrenching unpredictability, and those moments when we all wonder if anyone truly knows what’s going on in this chaotic power game —oh, and should we throw China into the mix next?
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