After one last 10-hour ordeal being grilled at Congress, Big Boy Sy finally agreed to a binding agreement that will let the Maharlika Investment Fund in Synergy Grid Philippines and National Grid Corp. of the Philippines for a 20 percent stake. Maharlika president Rafael Consing said the deal would grant MIC two board seats each at SGP and NGCP.
Energy Secretary Popo Lotilla immediately explained that Maharlika’s entry in NGCP aims to accelerate transmission infrastructure projects through its investment. Lotilla said he believes that Maharlika’s investment will provide the necessary capital for NGCP to avoid further delays and expedite completion of key transmission infrastructure.
Lotilla may not be that accurate in claiming Maharlika will provide the necessary capital to NGCP to avoid further delays in project completion. NGCP and SGP are capable of raising the capital required. Indeed, NGCP has been advancing billions of pesos to facilitate project completion even if there is no certainty of recovering quickly due to the slow approval process at the Energy Regulatory Commission.
NGCP’s major problems that are causing delays are government red tape in the acquisition of right-of-way and corrupt LGU officials trying to squeeze NGCP with assorted requirements, many of which only delay and increase cost of projects. The Department of Energy has been complaining that between 2016 and 2024, 98 percent of NGCP projects were delayed by as much as nine years.
Big Boy Sy however told Congress to look at the power problem as a whole. “The data is clear, 97 percent of the power interruptions from 2016 to 2023 were caused by problems of supply, not transmission.” Sy also underscored the need for stability, not just in the power grid, but also in supply, law, policy and regulation for a more robust power industry.”
Maharlika will improve coordination with DOE to speed up the interconnection of power grids across the Philippines, Lotilla said. It is interesting to see if Maharlika’s presence in NGCP will clear the bureaucratic roadblocks at the national and local levels to speed up project completion.
The energy secretary is correct to note that the timely completion of transmission projects is crucial for ensuring the security, reliability and affordability of power supply in the country. The government has long recognized the importance of transmission expansion in improving electricity access, reliability and lowering costs, with Lotilla adding that this step would further strengthen the country’s power sector.
It makes a lot of sense for Malacanang to name Lotilla as one of the directors representing Maharlika in the NGCP board. And in the reorganization of the board, they should remove the Chinese chairman representing the State Grid of China and put Lotilla as chairman instead. Having a Chinese chairman in a critical infrastructure with national security implications sends the wrong optics and is a focus of public dismay in the light of China’s aggressive bullying of Filipinos in the West Philippine Sea.
Lotilla as chairman of NGCP will also give him a direct hand in supervising completion of NGCP projects. It also removes an excuse we often hear from whoever is energy secretary that they have no control over the national grid. The buck will finally stop at the energy secretary’s desk.
On the whole, the entry of a high-profile government investment fund is good for NGCP, which was why I was an early advocate of it. The national power grid, an obviously natural monopoly, cannot remain fully private. I also do not buy the claim that Maharlika’s entry reversed the privatization of the grid. It merely gives the government an insider’s view of grid operations to assure stability of service and protect national security.
The other big reason why Maharlika has to step in was the Chinese government presence in NGCP. A foreign state-owned company should never have been allowed to participate in the privatization process to begin with. It happened because then president Gloria Macapagal-Arroyo was very cozy with China.
A true privatization should only involve private companies, specially for a vital asset like our transmission grid. Worse, Big Boy and Robert Coyiuto made the mistake of electing the representative of the State Grid of China as chairman, making it look like they are calling the shots at a time of bad blood between our countries.
The entry of Maharlika shouldn’t be seen as the government changing the rules in midstream the way Duterte changed the rules for the water concession companies in Metro Manila. This is definitely not a change in the privatization policy of the government.
But let no one think this is a magic pill that will make our energy situation good enough. There are still so many policy issues and bureaucratic processes that must be addressed. ERC, the agency that regulates and therefore calls the shots, should be fixed. The delays in approvals are a major cause of the problems of the power sector.
It seems ERC lacks quality officials and staff. There is no energy economist and no electrical engineer among the ERC commissioners. The President still has to complete the appointments of the commissioners. The worst part is that ERC merely inherited the staff of the defunct ERB or Energy Regulatory Board. It is easy to see that many of them are just coasting along to retirement.
BBM must make sure the quality of ERC staff is similar to the staff of the Philippine Competition Commission or PCC. They have to do a lot of number crunching in deciding ERC cases and it is doubtful they have enough competent economists and accountants. That explains the cause of delays in decision making.
We can only reiterate the need for truly independent and competent commissioners and staff for ERC. ERC’s credibility will continue to suffer as the public suspects regulatory capture and overall incompetence without quality appointments.
Maharlika’s entry in NGCP is a good move. But we need a more professional ERC for things to really work out well for the power sector.
Boo Chanco’s email address is bchanco@gmail.com. Follow him on X @boochanco