THE Senate Energy committee is poised to mount a follow-up probe into the delayed initial public offering (IPO) of the National Grid Corp. of the Philippines (NGCP).
Sen. Sherwin Gatchalian, committee chairman, said the mandated IPO is “long overdue,” effectively preventing the NGCP from going public.
Gatchalian griped that the decade-long delay was “depriving Filipinos of their fair share in the public utility.”
In a statement, the senator noted that until now, the Philippine Stock Exchange (PSE) has “yet to comply” with the submissions required during the first Senate inquiry on the issue, even as the Energy Regulatory Commission (ERC) has yet to update the Senate committee on its compliance with its submission.
He recalled that on April 3, 2019, the Senate Committee on Energy asked the ERC to submit a “firm timetable” for the resolution of the NGCP’s case, to determine whether NGCP can extend its IPO. The ERC, in its submission, had promised to submit its decision on the case on October 29.
The Senate Energy committee, likewise, required the PSE to provide a simulation/research as to why an NGCP IPO with unfavorable market conditions mostly related to the company’s relationship with regulators and government agencies is detrimental to consumers.
“We want to tackle the IPO issue of the National Grid because we think this is going to be beneficial to our consumers, directly and indirectly. We will conduct this hearing to understand from both the ERC and DOE [Department of Energy] as to where we are in this initial public offering of the NGCP,” the senator stressed.
Gatchalian pointed out that members of Congress, being the representative of the people, “were the ones who approved this franchise with condition of the IPO. So we’re answerable to the people why the IPO hasn’t been executed after 10 years. From my standpoint right now, I don’t see that deep rationale why the IPO didn’t happen.”
He added that under the NGCP’s charter, it has 10 years from January 15, 2009, to comply with its statutory requirement to offer at least 20 percent of its outstanding capital stock to the public. The 10-year period ended on January 15, 2019. Based on its audited financial statements, the NGCP declared a total cash dividend of P169.893 billion in the past nine years. Had there been an IPO in 2009, the public would have received P33.98 billion in dividends.
However, the NGCP filed a petition before the ERC on November 13, 2018, to extend the IPO by one year, which it said was allowed under the law. During the hearing of the Senate Committee on Energy conducted in April, the NGCP blamed pending disputes with the National Transmission Corp. and the Power Sector Assets and Liabilities Management Corp. for the delay of its IPO.
Gatchalian believes the NGCP float will benefit Filipino consumers since it will promote greater public participation in an important public utility. Such participation includes attending and casting votes during stockholders’ meetings to ensure stronger corporate governance.
He aired expectations of greater transparency in the NGCP since publicly listed companies will require three independent directors, real-time disclosure of material information, public annual report, public declaration of dividends, brand and seal of good housekeeping, according to the senator. “I think the consumers will stand to benefit, either directly or indirectly, in the participation on the governance of the utility. Because even with one share, your voice will be heard,” Gatchalian said. “And with that one share, the alignment that was mentioned before will happen, but without any public participation, there is no way for the public to align their direction with the utility.”