Synergy Grid [SGP 8.95 3.2%; 744% avgVol] [link], the awkward direct and beneficial owner of National Grid Corporation of the Philippines (NGCP) through the various private companies of Henry Sy, Jr. and Robert G. Coyiuto, Jr., is now in the political hot seat.
Some senators accused NGCP of violating the terms of its 50-year franchise agreement as various parts of the country continue to struggle with power outages.
Some senators accused NGCP of distributing too much of its income to shareholders through dividends, leaving too little for grid development. Some senators accused NGCP of charging customers for projects that were not yet operating.
Some senators raised the presence of China as a 40% investor in NGCP as a “security concern”.
The Senate Energy Panel chairperson, YouTuber Raffy Tulfo, said that he recommended canceling NGCP’s franchise to the President and that the “fastest way” to do that would be through a probe that Senator Tulfo’s committee would conduct.
MB BOTTOM-LINE
The use of public-facing utilities as populist political punching bags is nothing new.
It’s an easy source of media attention, and makes for even better “meat” for the political grinder if it’s possible to weave in some vaguely jingoistic rhetoric about China (as the Senators have been sure to do here).
The “franchise attack” is part of the strategy that the Duterte administration used to force the Zobel Family to sell Manila Water [MWC 19.52 0.7%; 151% avgVol] to Enrique Razon.
It’s what Duterte used to kill the franchise renewal of ABS-CBN [ABS 7.15 0.7%; 99% avgVol]. And it’s the sword that Duterte held over the head of Globe [GLO 1730.00 0.3%; 42% avgVol] and PLDT [TEL 1275.00 2.4%; 113% avgVol] when he was forcing Dito Telecommunity [DITO 3.16; 27% avgVol] into the marketplace with sweetheart terms and treatment. Before Duterte I’d have laughed off this kind of puffery, but the previous administration showed that our institutions are not strong enough to resist the political will of a group that is intent on making these types of huge changes.
Will this administration uphold the rule of law and the sanctity of our contracts, or will this NGCP have legs outside of Senator Tulfo’s committee and be a bigger problem for NGCP and SGP’s shareholders in the months to come?
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