The country’s transmission grid

Idon’t know which was more disturbing – a senator combing his handlebar mustache during a senate hearing aired live on national television or another senator seeking to “take back” the systems operation of the country’s transmission grid from its private operator.

For sure, I find it bewildering why our lawmakers are calling to rescind a government contract at this time when President Marcos has been roaming the world to entice foreign investors to come to the Philippines.

The National Grid Corp. of the Philippines, the country’s transmission grid operator, is far from perfect and like any other entity imbued with public interest, it must be penalized accordingly if found guilty of violating any of its obligations to the public. The Energy Regulatory Commission has been doing that in fact.

Open for business

But to dangle the threat of practically revoking its franchise sends the wrong message to investors. And this comes at a time when Marcos has been telling the world that the Philippines is open for business.

And if we try to imagine a “take back scenario” how will the government proceed with this without violating the laws that granted NGCP the franchise in the first place? Even the president knows it’s not going to be easy. There has to be a “good reason” to withdraw the franchise of NGCP, Marcos said, arguing that the problems hounding power distribution would still be there regardless of who operates the transmission grid.

Looking for a new power grid operator would result in a gap since whoever takes the role lacks the experience and will therefore still need to train its people, he also said in a recent interview in Pagudpud, Ilocos Norte.

How it all began

It would also be good for our lawmakers to look back into why the country’s power sector had to be privatized in the first place – remember the dark days of the 1990s?

Thus, the Electric Power Industry Reform Act of 2001 (EPIRA) mandated the privatization of the transmission facilities, including grid interconnections and ancillary services, through an outright sale or a concession contract – considered as one of the biggest Philippine privatization on record.

NGCP was granted a 50-year congressional franchise (renewable after 25 years) and it started operating the country’s transmission lines in 2009.

The company is 60 percent owned by Filipino billionaire tycoons Henry Sy Jr. and Robert Coyiuto, Jr. while its technical partner, the State Grid Corporation of China (SGCC), holds the remaining 40 percent.

Note that SGCC is not just any company but is a stateowned mammoth electric utility corporation.

It is the largest utility company in the world, and as of 2022, it is said to be the world’s third largest company by revenue, behind only Walmart and Amazon. It recorded a revenue of $460 billion last year.

Senator Raffy Tulfo, who heads the Senate energy committee, however, has been saying that Chinese ownership of NGCP “poses serious national threats.”

It’s not a new issue; in fact interest groups resurrect this concern nearly every administration but NGCP, in its defense, has long addressed this point.

It has clearly stated that SGCC serves as the technical adviser of NGCP, but management and control, including its System Operations (SO), are exercised exclusively by Filipinos.

Even in NGCP’s 10-member board, four directors are from SGCC, with their board representation commensurate with their investments.

But assuming for the sake of argument that SGCC can shut down our grid, wouldn’t they have more to lose as a business if they do that? Wouldn’t they be putting at risk whatever future foreign ventures they may have if they do that?

In real life, however, there are layers of protection so that everything that NGCP does on a day-to-day level is done by Filipino managers and engineers and executives.

It’s one thing to be scared and guarded when it comes to safeguarding the interest of Filipinos but weaving myths without basis may unnecessarily fan the flames of war.

I’m sure the government and our security forces can check and even conduct a security audit on NGCP’s operations anytime they want.

Policy changes

In any case, the ongoing discussions centered on NGCP and the power sector would hopefully invite serious conversations and policy changes on how power players can improve the delivery and transmission of power to consumers.

Note the grid operations are just one component. The whole power industry is composed of many moving parts, and many of these parts are affected by a wide array of factors, including politics, corruption in securing local permits and grandstanding lawmakers.

Moving forward, we need a holistic solution and better coordination within the entire energy supply chain to better address system disturbances and power outages.

As the NGCP said, “we continue to advocate for a holistic approach to power planning. Development in all sectors involved in the power industry must be coordinated, with due attention given to each. We support the Department of Energy in all its efforts, and we are confident of its continued support to all sectors.”

Note, too, that unplanned outages are outside of the Grid Operating and Maintenance Program, which is planned well ahead and coordinated by NGCP with the power plants and approved by the Department of Energy.

NGCP, of course, must continuously prove its commitment to strengthening the country’s transmission system and supporting the power system by embarking on big-ticket transmission projects.

As for our lawmakers, it would be wise to be fair when it comes to raising objections against private investors or businesses or existing contracts.

And while we’re at it, it would also be good to groom one’s mustache in the men’s room.