Maharlika eyeing NGCP shares of State Grid of China

MANILA, Philippines — The Maharlika Investment Corp. (MIC) is open to acquiring shares of the State Grid Corp. of China (SGCC), which owns 40 percent of the National Grid Corp. of the Philippines (NGCP).

“If it becomes available, I think so, yes,” MIC president and CEO Rafael Consing Jr. said when asked whether the MIC considers getting shares of the SGCC amid concerns regarding the influence of Beijing in the operation of the country’s power grid.

But Consing clarified that MIC is “not having any discussions with SGCC at this point in time.”

At the same press briefing, Energy Secretary Raphael Lotilla said the investment would allow “greater transparency” in the operation of NGCP.

“As NGCP is stating that there is nothing to fear from the presence (of Chinese in the board), then we will be in a better position to confirm or affirm that,” Lotilla said.

“On the other hand, if there are other things that need to be strengthened, for example the cyber security of the transmission lines of the country and the transmission facilities, then we would also be able to – government would also be better able to contribute to addressing those issues,” he said.

P1.28 billion/year projected

The MIC is expected to generate P1.28 billion per year in the next three years with its P19.7-billion investment in the NGCP, its first since its establishment in 2023.

Its exposure in NGCP is also expected to help significantly reduce the cost of electricity in the country, officials said yesterday.

In a press briefing at Malacañang, Consing said the P19.7-billion investment represents the 20 percent share of the MIC – the country’s first sovereign wealth fund – in the NGCP through the Synergy Grid and Development Philippines Inc. (SGP), at P15 per preferred share.

SGP, which has a 60 percent stake in NGCP, has accepted the binding offer from the Marcos administration, granting MIC two board seats each in SGP and NGCP.

“The preferred share will guarantee us with a six and a half percent dividend yield over the first three years wherein following which within those three years, we would then need to convert or we’ve got the option rather to convert to common shares. Filling which, the dividend rate would then rise to eight percent,” Consing said.

“Six and a half percent cash dividends. Six and a half percent multiplied by 19.7 billion – just kindly calculate that,” he added.

If MIC decides to convert the shares, they will then be valued at P22.50 apiece, The STAR has learned.

“Since P15 divided by P22.50 is equal to 66.67 percent, that means around two-thirds of the 1.3 billion shares will be converted into common shares,” Peter Garnace of Unicapital Inc. said.

“While MIC will not actually pay for the price difference, this is beneficial to MIC since they are able to convert preferred shares into common shares that are worth more than the effective cost of conversion,” Garnace added.

In a regulatory filing yesterday, SGP said convertible preferred shares would be created and issued out of the increase in its authorized capital stock.

The company said the binding term sheet is subject to the completion of due diligence on SGP and its subsidiaries, the negotiation and execution of the definitive agreements, the mandatory corporate approvals of the concerned parties, and the compliance with relevant agencies.

Following the news of MIC’s investment, SGP shares rose by 4.74 percent to P11.50 each yesterday.

President Marcos witnessed the signing of the binding term sheet between Consing and SGP chairman Henry Sy Jr. at Malacañang on Monday.

Consing said they expect the acquisition to be finalized within the next 90 days. “As to who will represent us, at the moment that’s not been decided yet so we’ll defer to the wisdom of the board as to who will be appointed,” he added.

Lower power costs

On the potential of MIC’s investment in the NGCP to bring down electricity costs, Lotilla said the exposure would improve transmission infrastructure, resulting in reduced electricity bills.

“After a transmission project is finished, it can actually contribute to lowering prices because it addresses the constraints, the transmission constraints that drive prices up,” Lotilla said.

Consing said the NGCP’s transmission grid rollout would allow more power players to supply electricity, which could ultimately lower electricity prices.

“The way NGCP contributes to lower electricity is by ensuring that the rollout indeed happens because once you have that transmission grid infrastructure rolled out successfully, then you have more power players that can provide supply to the grid,” Consing said.

“Just like any commodity, with more supply coming into the grid, the price of power will, at some point, come down,” he explained.

Lotilla cited the Mindanao-Visayas Interconnection Project – completed in 2024 – as an example of how improved transmission infrastructure can reduce power costs.

He noted specific decreases in spot market prices: P1.99 per kilowatt-hour in Luzon, P1.77 in the Visayas, and P1.30 in Mindanao. — Helen Flores, Cecille Suerte Felipe, Jose Rodel Clapano