Synergy Grid infuses P12.2 billion into NGCP

MANILA, Philippines — Listed Synergy Grid and Development Philippines Inc. (SGP) is boosting the capital expenditure program of power transmission operator National Grid Corp. of the Philippines (NGCP) with a P12.24-billion share subscription.

SGP is subscribing to 203.63 million non-voting preferred shares of NGCP at P60.10 apiece, as approved by is board and in compliance with the conditions of its follow-on offering (FOO) on  Nov. 10, 2021.

It will pay P12.24 billion in cash coming from the proceeds of the FOO, which will be used to fund capital expenditure programs of NGCP, as well as other related expenses.

“This amount will be a huge boost to fund NGCP’s capital expenditure, a huge chunk of which is on new transmission projects for the improvement, upgrading  and expansion of the country’s power grid,” SGP chairman Henry Sy Jr. said.

In the next 13 years, NGCP is committed to invest approximately P440 billion across 211 projects that are aimed at supporting the growing electricity demand in the country and to make the country’s power backbone continuously reliable.a

The massive multi-year investment will support the expected growth in demand at an annual average growth rate of 6.23 percent for 2021 to 2025, 6.73 percent for 2026 to 2030, and 6.49 percent for 2031 to 2040, as detailed in the 2021 consultation draft of the Transmission Development Plan (TDP).

The TDP outlines NGCP’s plans to expand, develop and monitor the grid throughout the country.

The subscription will also result in an increase in NGCP’s capitalization, as well as give SGP a direct stake in NGCP of 9.241 percent of the latter’s outstanding capital.

This will also entitle SGP to the features of the non-voting preferred shares, such as receipt of dividends, apart from the dividends that SGP already indirectly receives from NGCP through holding companies.

In the past two years,   NGCP had declared an annual dividend of P12 billion for its common shares, released on a quarterly basis.

“Our investors who chose to partner with us at SGP are instrumental in ensuring that NGCP’s projects in the pipeline will come into fruition and play a significant part in the country’s economic development,” said  Robert Coyiuto, SGP vice-chairman.

Last November, SGP conducted a FOO of 1.05 billion primary shares with an overallotment option of up to 101 million secondary shares at P12 apiece.

The offering was in compliance with NGCP’s franchise undertakings, which include the offer of at least 20 percent of its outstanding capital  through the completed share swap and FOO.

NGCP, which is SGP’s sole operating asset, holds the sole and exclusive 25-year concession and a 50-year Congressional franchise to operate the Philippines’ transmission network, linking power generators and distribution utilities to deliver electricity to power distributors and cooperatives nationwide.

SGP indirectly controls 60 percent of the outstanding capital  of NGCP, with an effective equity interest of 40.2 percent consisting of common shares.