PRIVATELY owned National Grid Corporation of the Philippines (NGCP) faced the Senate on Wednesday to respond to questions on the continued delay of its initial public offering (IPO), which is a provision under its franchise as the transmission system operator.
“First, the absence of the final determination of price control arrangements from the ERC (Energy Regulatory Commission) for the fourth regulatory period (2016-2020); second, the pending disputes among NGCP, TransCo (National Transmission Corp.) and PSALM (Power Sector Assets and Liabilities Management Corp.), which are now in arbitration; and third, the public threats made against NGCP’s concession, whether or not these are raised in arbitration,” NGCP spokesperson Cynthia P. Alabanza said during the Senate hearing.
She said the grid operator is not asking for an exemption to comply with the requirement to list its shares of stock.
“Consistent with the performance of its obligations under its franchise and the concession agreement, NGCP intends to comply with the requirement of listing of shares,” Ms. Alabanza said.
“NGCP simply asks for a reasonable extension of the period within which to do so, as expressly allowed under Section 8 of its franchise (Republic Act No. 9511), based on the ground that the market condition is not suitable for such listing,” she said.
“NGCP thus filed its petition for extension for the listing of the shares, which is now pending before the ERC,” she said.
Ms. Alabanza said NGCP’s franchise allows the dispersal of ownership to be by backdoor listing.
“As early as 2010, or just a year after NGCP began its operations, NGCP took steps towards a backdoor listing involving at least 30% of NGCP’s outstanding shares of stock. This, however, did not push through due to an adverse ruling by the Bureau of Internal Revenue regarding the tax-free status of the transaction. This backdoor listing, had it pushed through, we believe would have fully complied with Section 8 of NGCP’s franchise,” she said.
Ms. Alabanza said that long before the filing of its petition before the ERC, and independent from the backdoor listing attempt, NGCP had been receiving and evaluating unsolicited proposals beginning 2014 from various foreign and local banks for a possible IPO.
“NGCP’s finance group had discussions with these banks, the documentary requirements for the listing and public offering of the shares were prepared, the company’s financial records were compiled, and NGCP officers attended seminars on corporate governance, which is a requirement for the listing of the shares with the Philippine Stock Exchange,” she said.
NGCP’s delayed IPO was highlighted again after state-led TransCo asked the ERC to deny NGCP’s petition to defer its listing. TransCo said the grid operator should not be allowed to benefit from its decade-long inaction to abide by the provisions of its franchise.
TransCo enumerated six main reasons for opposing NGCP’s petition, including the filing of the extension just a little over two months before the expiration of the ten-year period on Jan. 14, 2019.
“It provides no explanation or justification why it waited until almost the very end of the stipulated compliance period to formally request the ERC for an extension. By the beginning of 2018, NGCP possessed all the financial indicators necessary to make an assessment on whether it can pursue its IPO within the last year,” it said.
NGCP filed a petition seeking to defer the public listing of its shares as mandated by Section 8 of its charter, Republic Act No. 9511, which was signed into law on Dec. 1, 2008.
Senator Sherwin T. Gatchalian, who chairs the Senate energy committee, said the spirit of NGCP’s franchise is to go public.
“Pag delayed ang IPO ang buong kita na kay NGCP. Hindi ibibigay sa public,” he said, adding the divideds chalked by the grid operator had reached about P160 billion in the past 10 years.
He said moving forward, that amount could also be the accumulated dividends in the next 10 years. — Victor V. Saulon
