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Barking up the wrong tree

"A well-entrenched power cartel was created."

 

 

(Conclusion)

Under the Epira Law, power plant operators and distribution utilities have only up to five years to comply with the divestment requirement or up to June 8, 2006. Section 28 was intended to encourage participation of the general public to wipe out the huge indebtedness of Napocor and to temper the wide economic disparity in our society. This underscores why the emergency power under R.A. No. 7648 was extended with an added assignment of forcing the owners to divest their stock ownership.

Rather, the opposite happened. A well-entrenched power cartel was created with an insult that instead of the oligarchy helping the government wipe out Napocor’s unpaid loans they created, they took turns in sinking the industry deeper in debt that today has an unpaid loan almost equal to the amount it guaranteed to construct the whimsically mothballed BNPP.

R.A. No. 9136 was completely ignored as if the provision never existed. The power industry cartel employed the dual approach: first, by deregulating the industry, and second, by defanging the ERC of its police power to regulate the market. It was bonanza for the demigod tycoons that stand today as modern-day maharajahs.

In a last minute attempt to restore the financial viability of Napocor, R.A. No. 9511 was passed on December 1, 2008 or “An Act granting Napocor a franchise to engaged in the business of conveying or transmitting electricity through high voltage back-bone system of interconnected transmission lines, substations and related facilities.” First, the decision to chop Napocor was necessitated by the fact that no private corporation was willing to assume its enormous liabilities.” Second, the players in the industry, mostly the power plant operators have already been allowed to generate their own power and sell them directly to the various utility operators, undercutting the price set by Napocor, insisting that its diesel-powered plants cause much pollution. Third, the confinement of the transmission grid to NGCP means the operators can only demand an increase in their so-called “wheeling fees” if generation plant owners and distribution utility operators are given their rate increase, which under the “performance rate” formula, was made automatic. Fourth, the business maintaining and securing the transmission grid entail high risk as the lines are prone and vulnerable to sabotage by rebels in the hinterland.

Thus, the entry of State Grid Corporation of China right after the dissolution of Transco was to give way to the creation of NGCP. SGCC was joined by Monte Oro Grid Resources Corp., led by Henry Sy, Jr. acquiring 30%, and Calaca High Power Corp., by Robert Cuyuito, Jr., also with 30%. SGCC represented by Zhu Guangchao owns 40% of the stocks after submitting the highest bid of $3.95 billion for a 25-year franchise to operate. SGCC’s participation is in accordance with the Constitution, and with our Foreign Investment Act of 1993 on top of the law specially creating NGCP.

However, the law requiring the dispersal of ownership under Section 28 of the Epira Law was superseded by Section 8 of R.A. No. 9511 or the law creating NGCP, to quote: “The Grantee shall x x x make a public offering of the shares representing at least twenty per centum (20%) of its outstanding capital stock or a higher percentage x x x within ten (10) years (or up to December 2016) from the commencement of its operations: Provided, That the listing in the PSE of any company (stockholders) which directly or indirectly owns or controls at least thirty per centum (30%) of the outstanding shares of stock of the Grantee shall be considered full compliance of this listing requirement.”

On the other hand, Section 6 gives a proviso, to quote: “x x x That the foregoing limitation shall not apply to any transfer or issuance of shares of stock x x x pursuant x x x to any foreign or local investors pursuant to or in connection with any increase in the Grantee's authorized capital stock which results in the dilution of the stockholdings of the Grantee's then existing stockholder x x x.” This has particular reference to China as investor of NGCP.

SGCC is a foreign corporation operating in accordance with Section 11, Article XII of the Constitution. SGCC was invited to help raise the much-needed capital when Napocor was experiencing financial difficulty. Moreover, Monte Oro Grid Resources Corporation and Calaca High Power Corporation can also claim exemption under Section 28 much that the two corporations are already listed with the PSE, meaning the public can purchase at anytime their shares stocks.

Altogether, the threat made by Senators William Gatchalian and Rissa Hontiveros to open the books of account of NGCP would unnecessarily vex foreign investors we invited. Besides, the law requires they can only open their books of account by the ERC and to the BIR to ensure fiscal compliance. Without prima facie evidence indicating anomaly, the threat of Gatchalian would amount to fishing expedition which could be enjoined by the court.

While the Senate cannot be prevented from inspecting corporations, it being plenary to its duty and in aid of legislation, without an iota of evidence such would result in grave abuse of discretion. The Senate cannot use its legislative power to harass corporations that enjoy a valid franchise or much more usurp the functions and duties of the ERC and the BIR. Gatchalian and Hontiveros are woefully off-tangent. The only condition we impose is for it to faithfully comply with our Constitution. SGCC is a state owned corporation of China, and we cannot demand beyond what our own laws provide and grant.

SGCC though NGCP has poured in over P17 billion since 2009 to improve our power transmission by adding an equivalent of 4,325 megavolt amperes (MVA) in substation capacity, 480 circuit kilometers in transmission line, and 46 projects for better operation and maintenance. NGCP’s revenue in 2010 amounted to $233.7 billion. This means SGCC is spending more than earning from its investment.

They ignore that it was during the Ramos administration when Napocor segregated its transmission grid as per recommendation by the financial hustlers from the World Bank to lighten the cost of investment and save Napocor. In fact, it was the country’s top oligarch that invited China to participate, and accepted it with an open mind to further the friendship of the two countries.

Gatchalian and Hontiveros unexpectedly had to eat their words about the intention of China’s state grid corporation after Anthony L. Almeda, NGCP president and CEO, unexpectedly announced it will donate P1 billion to assist the COVID 19 frontline health workers, P500 million in the form of goods and medical equipment and another P500 million for response purposes as may be determined by the office of the President.

Finally, the two Senators should stop their demagoguery because it makes them appear more silly and stupid. They should stop the fear mongering that the country’s national transmission grid is being operated by the Chinese and fantasizing that China with a blink of an eye could stop and immobilize our transmission grid. They blurted that this could affect our national security which is exactly the same meme spoon-feed unto them their knee-jerk American brokers.

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Topics: Epira Law , State Grid Corporation of China , Henry Sy Jr , COVID 19 , ERC
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