ERC blocks bid of Transco, Psalm to intervene in NGCP’s IPO delay

By Lenie Lectura – July 31, 2019
from Business Mirror

THE National Transmission Corp. (Transco) and the Power Sector Assets and Liabilities Management Corp. (PSALM) were not allowed by the Energy Regulatory Commission (ERC) to intervene in the petition for the approval of the IPO (initial public offering) extension filed by the National Grid Corp. of the Philippines (NGCP).

In its 12-page order, the ERC denied for lack of merit the petition for intervention filed by Transco and PSALM. At the same time, the ERC ruled that it has jurisdiction to hear and decide on NGCP’s petition.

“It is clear that RA 9511 and the Concession Agreement affirmed that neither PSALM nor Transco has the authority to regulate or supervise NGCP’s compliance with its franchise law, only this commission.

“Therefore, PSALM and Transco has no direct and substantial interest in the instant petition, more so on its outcome, lacking one of the requirements of the commission to grant their petition for intervention. Hence, the same should be denied,” stated the ERC order which was signed by the chief of the oversight committee for legal service, ERC Commissioner Josefina Patricia Magpale-Asirit.

The ERC said there are two requisites for granting the petition for intervention: one, if the petition has a direct and substantial interest in the proceedings; and two, if the intervention would not unduly broaden the issue.

“Applying the said parameters, Transco and PSALM failed to show that they have direct and substantial interest in the petition, hence, the same is hereby denied,” said the ERC. “A mere invocation of the Epira which created Transco and PSALM does not automatically vest them the right to intervene in the instant proceedings, absent any clear legal standing as required by the rules of the commission.” Also, the ERC pointed out that it has the jurisdiction to hear and decide NGCP’s petition, as it is the regulatory agency of the government with sole authority to regulate the transmission business.

“The very subject matter of this petition is the obligation of NGCP for public listing under Section 8 of RA 9511. This is squarely within the jurisdiction of the commission pursuant to the Epira,” added the ERC.

Under the law, NGCP should make a public offering of the shares representing at least 20 percent of its outstanding capital stock within 10 years from the commencement of its operation or until January 14, 2009.

On November 13, 2018, NGCP filed a petition for extension for the listing of the shares.

Among others, the NGCP cited the following reasons for delaying its IPO:

  • The pending arbitration case filed by NGCP before the Singapore International Arbitration Centre (SIAC) against Transco and PSALM.
  • The delay in the implementation of its Regulatory Reset.
  • The period provided for compliance with Section 8 of RA 9511 is merely directory.
  • There is no implementing rules and regulations for compliance with Section 8 of RA 9511.
  • The timing of the public offering is addressed to the discretion of NGCP’s board if directors.

Transco and PSALM filed their opposition questioning the jurisdiction of the ERC in December 2018.