Maharlika fund to invest in NGCP

By Kyle Aristophere T. Atienza, Reporter

THE PHILIPPINE government through its sovereign wealth fund has agreed to buy a 20% stake in a Filipino company that has a 40% stake in the National Grid Corp. of the Philippines (NGCP), according to the presidential palace.

The Presidential Communications Office (PCO) said in a statement that the Maharlika Investment Corp. (MIC), which manages the Maharlika Investment Fund, signed a binding agreement with Synergy Grid & Development Phils., Inc. (SGP) for an undisclosed amount.

MIC will subscribe to preferred shares offered by SGP, which owns 40.2% of NGCP. NGCP operates the country’s power grid.

This marks MIC’s first investment since President Ferdinand R. Marcos, Jr. signed the law creating the country’s first sovereign wealth fund in July 2023.

“I think, in the end, we found a good solution to everyone’s concern,” Mr. Marcos said during the signing of the deal between MIC President and Chief Executive Officer Rafael D. Consing, Jr. and SGP Chairman Henry T. Sy, Jr. on Monday.

Mr. Consing was quoted as saying that the deal would give MIC two seats each on the boards of SGP and NGCP.

“Once the acquisition is completed, we shall be entitled to two out of nine seats in the SGP board, after the total seats are increased from seven to nine. At NGCP, the government gains representation through two out of 15 board seats, following an increase in the total seats from 10 to 15,” he said. 

The PCO statement quoted Mr. Consing as saying that MIC’s maiden investment “would safeguard the nation’s power supply from external threats and disruptions.” He noted the government also needs “to have a say in NGCP decisions.”

The deal comes amid concerns raised over the 40% ownership by the State Grid Corp. of China (SGCC), a government-owned enterprise of the Chinese Communist Party, in the grid operator. Critics including lawmakers from both Houses of Congress have alleged that engineers in Beijing could plunge the entire country into darkness with the flick of a switch.

Tensions between the Philippines and China have worsened in the past year amid confrontations in the South China Sea where both have competing claims.

NGCP in 2007 was granted a 25-year concession to operate the Philippines’ transmission system, with the possibility of renewal for an additional 25 years. It began operations in 2009.

Energy Secretary Raphael P.M. Lotilla said the MIC’s investment in NGCP is a “step towards attaining our goal of ensuring security of supply, reliability, affordability, and promoting competition in the power sector.”

With two board seats each in NGCP and SGP, Mr. Lotilla said: “Maharlika can pave the way for better coordination between the DoE (Department of Energy) and the NGCP to help expand transmission connections in a timely manner and speed up the interconnection of our power grid across the archipelago.”

“Government investment in transmission would make additional capital available for NGCP to deploy in the pursuit of completing transmission projects on time.”

Sought for comment, NGCP Assistant Vice-President and Head of Public Relations Cynthia P. Alabanza said in a Viber message, “NGCP has no statement. Please wait for the relevant disclosures to be made by the parties concerned.”

Last week, NGCP officials told lawmakers that it is a Filipino-controlled company.

Speaking before the House Committee on Legislative Franchises, Mr. Sy, who sits as the vice chairman of NGCP, said Filipino corporations Monte Oro Grid Resources Corp. and Calaca High Power Corp. each hold 30%, or a total of 60% of the outstanding capital stock of NGCP.

Mr. Sy reiterated at the hearing that “NGCP alone, through its Filipino directors and personnel, and not the Chinese, has control over the system operations.”

The NGCP has said it is open to a national security review as authorized by a 2022 law that liberalized foreign ownership in select domestic industries.

“The entry of the MIC into the NGCP should serve as a check on the operations of national grid, particularly whether foreign interests are being advanced in enterprises deemed public utilities,” said InfraWatch PH convenor Terry L. Ridon.

“On the other hand, the MIC and government should be able to benefit from the substantial margins generated by the grid and contribute to the gains of the sovereign wealth fund,” he added in a Facebook Messenger chat.

Mr. Ridon said the country’s power regulator should determine whether the grid’s margins are reasonable and reflect prices affording the least cost to the public.

Ateneo de Manila University economics professor Leonardo A. Lanzona, on the other hand, said the investment deal was “strictly unnecessary as the government already has sufficient regulatory authority over NGCP.”

“The key challenge lies in effective enforcement of existing mechanisms rather than direct ownership,” he said via Messenger chat.

“If the government can strengthen its oversight without financial investment, it may achieve similar results while preserving public funds for other critical infrastructure needs,” he added.

The MIC, which was created by a 2023 law, has an authorized capital stock of P500 billion. Of this, P125 billion were sourced from the investible funds of the Land Bank of the Philippines (LANDBANK) and the Development Bank of the Philippines, as well as contributions of the National Government which include dividend remittances of the Bangko Sentral ng Pilipinas.

Asked whether the investment deal was a prudent decision, LANDBANK President and Chief Executive Officer Lynette V. Ortiz said in an interview: “I have to say yes, of course.”

“I think it’s all aligned with the mandate on providing sustainable power that’s affordable and a grid that is reliable,” she said.

Mr. Lotilla also likened the government’s investment in transmission to the United Kingdom’s decision to renationalize its transmission system operator last year.

“It will be recalled that the UK renationalized the British power system operator in September 2024 to support energy security, help keep bills down, and facilitate the entry of more renewable energy projects,” he said.