MIC: Maharlika’s maiden investment in NGCP can help lower power rates

MANILA, Philippines – The Maharlika Investment Fund’s (MIF) maiden investment in the country’s power grid will help lower power prices, the Department of Energy (DOE) said Tuesday, January 28.

Rafael Consing Jr., president of the Maharlika Investment Corporation (MIC) which manages the MIF, said the fund’s maiden investment can achieve this by providing some security in power supply. This means supporting the National Grid Corporation of the Philippines (NGCP) in rolling out its transmission infrastructure projects.

Energy Secretary Raphael Lotilla cited the Mindanao-Visayas Interconnection Project as an example. He said the wholesale electricity spot market (WESM) prices dropped after its completion in 2024, as around 400 megawatts of Mindanao’s power surplus was exported to other regions.

“So as we roll out more of these projects, then mas lalong walang balakid sa pag-supply ng kuryente. So noon, ‘yung Mindanao na may 800 megawatts na extra or overcapacity ay ngayon nakapag-export na sa Visayas at Luzon ng 400 megawatts dahil natapos ‘yung proyekto,” he explained.

(So as we roll out more of these projects, we’re able to reduce the obstacles in electricity supply. Before [completion of Mindanao-Visayas Interconnection], Mindanao had an overcapacity of 800 megawatts. But 400 megawatts were exported to the Visayas and Luzon because the project was completed.)

Lotilla added that the MIC’s two seats in the board of the Synergy Grid & Development Philippines (SGP) and NGCP will also allow the company’s plans to align with national development goals.

According to Consing, the sovereign wealth fund acquired its 20% stake in the country’s grid operator through a binding offer with SGP for P19.7 billion or around P15 per preferred share. After three years, the MIC has the option to convert its shares to common shares, which will give the fund an 8% dividend yield.

SGP, which is led by tycoons Henry Sy Jr. and Robert Coyiuto Jr., has a 40.2% ownership interest stake in NGCP.

Consing expects the acquisition to be completed within 180 days. This period will cover comprehensive due diligence and regulatory approvals.

Consing also said the MIC will not be as involved in the day-to-day operations of the national grid operator as it is a financial investor.

Instead, the MIC hopes to have influence in the overall governance of the firm. This means the MIC will have access to the NGCP’s financial statements and a bird’s eye view of how the grid operator is run.

Buying Chinese stake in NGCP?

Consing said that the MIC is not in talks to acquire shares of China’s State Grid Corporation, which holds a 40% stake in NGCP. However, the sovereign wealth fund would be interested in the Chinese grid operator’s stake in NGCP should the opportunity arise.

For Lotilla, the government’s seats in the NGCP board will also provide greater transparency in relation to its operations. 

“As NGCP is stating there is nothing to fear from the presence, then we’ll be in a better position to confirm or affirm that. On the other hand, if there are other things that need to be strengthened — for example the cyber security of the transmission lines of the country and the transmission facilities — then the government would also be better able to contribute to addressing those issues,” Lotilla said.

Consing also said the MIC is well aware of the issues plaguing the NGCP as it had conducted preliminary due diligence after the SGP accepted its offer.

Among the concerns raised include the supposed influence of the Chinese grid operator on its operations. The House legislative franchises committee compelled the NGCP to submit a copy of its shareholders agreement during its probe into the state grid operator’s performance on January 14.