NGCP defers IPO

By Lenie Lectura – January 28, 2019
from Business Mirror

THE National Grid Corp. of the Philippines (NGCP) is seeking deferment of the public offering of its shares.

The NGCP is required to comply with the statutory requirement to make a public offering of at least 20 percent of its outstanding capital stock as mandated by Section 8 of its charter, Republic Act 9511, signed into law last December 1, 2008. It had 10 years or until last year within which to comply.

Energy Secretary Alfonso G. Cusi said the government was contemplating on participating on the supposed public offering.

“Let’s say there will be a pubic offer the  government can buy and we could have sat on the board. That’s an option available to the government and all of us,” Cusi said.

In a filing with the Energy Regulatory Commission (ERC), NGCP cited the pending arbitration case it initiated against the Power Sector Assets and Liabilities Management Corp. (PSALM) and the National Transmission Corp. (Transco) before the Singapore International Arbitration Centre as reason to postpone its initial public offering (IPO).

The grid operator said the pending case would adversely affect its IPO plans as this may have a “speculative effect on the valuation of NGCP’s shares.” It said an unfavorable arbitral award would likely pull down the market value of NGCP’s shares.

The NGCP is requesting the IPO be postponed until after arbitration proceedings are terminated.

The NGCP cited the absence of regulatory revenue for the 4th Regulatory Period (2016 to 2020) due to the deferment of the regulatory reset. This delay, it said, may affect the valuation of its shares since potential investors do not have visibility as to its future earnings.

The NGCP won the concession to operate and manage the grid system in December 2007 for $3.95 billion. Transco still owns the assets. It is only the NGCP that operates the country’s power transmission network for 25 years. The parties are in a dispute involving, among others, P57.88-billion prepayment of concession fees in July 2013. At the time of NGCP’s prepayment, there was still an unpaid concession fee amounting to P3.9 billion.

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