Philippines May Retake Control of China-Held Grid Operator

image is BloomburgMedia_RURVKLT0G1KW01_17-05-2023_12-00-05_638198784000000000.jpg

Manila Electric Co. (Meralco) workers repair damaged power lines in Quezon City, Metro Manila, the Philippines, on Thursday, July 28, 2022. The Philippines gets about 57% of its electricity from coal, burning the equivalent of 29 million tons of high quality fuel, according to data from BloombergNEF and BP Plc. Photographer: Veejay Villafranca/Bloomberg

The Philippine government will take back control, if needed, of the company that runs the nation’s power transmission network partly owned by State Grid Corp. of China, President Ferdinand Marcos Jr.’s office said.

Marcos met with Senator Raffy Tulfo who heads a committee investigating the situation at National Grid Corporation of the Philippines following recent incidents of power outages in the Southeast Asian country. Marcos backed Tulfo’s proposal to “conduct a comprehensive study or hold hearings,” Marcos’s communications office said in a statement posted on its Facebook page on Wednesday.

Tulfo “aimed to examine the security aspect, particularly on who truly controls the corporation,” according to the statement. “If necessary, the government will take back control of the entity,” it said.

China’s State Grid has a 40% stake in NGCP after winning, with other investors, a 25-year concession to run the Southeast Asian country’s power transmission network in 2007. The remaining 60% is held by Filipino investors including Synergy Grid & Development Phils Inc. President Henry Sy Jr. and Prudential Guarantee & Assurance Inc. chairman Robert Coyiuto Jr. 

Shares of Synergy Grid slid as much as 7.4% on Wednesday to the lowest since 2010.

Chinese Foreign Ministry spokesman Wang Wenbin did not directly respond to a question on the Philippines’ plans when asked during a regular briefing in Beijing. “China supports Chinese companies in expanding cooperation with the Philippine side and achieving mutually beneficial results,” Wang said, adding that Manila is a “friendly partner” of Beijing.

Previous efforts by officials for government to reclaim control of power grid operations didn’t prosper and the Department of Energy has proposed to amend a 2001 law to ban foreign-owned or foreign government-backed enterprises from engaging in power transmission.

At a hearing of the energy committee on Wednesday, Senator Risa Hontiveros said they may need to scrutinize “not just China’s control of NGCP but the performance of the company itself,” adding “this time we might need to see if we have to revoke its franchise.”

NGCP is “ready to answer any and all questions raised concerning how we do business,” said spokesperson Cynthia Alabanza, adding the company had invested 300 billion pesos ($5.3 billion) to strengthen the transmission system.

(Adds comments from Chinese foreign ministry, Philippine grid operator, lawmaker)

©2023 Bloomberg L.P.

By Manolo Serapio Jr.


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