Demonic money

DEMONIC was the exact word used by the National Grid Corp. of the Philippines spokesperson, Assistant Vice President Cynthia Alabanza, in reaction to the question raised by a neophyte senator on the issue of dividend payouts to the franchisee shareowners.

For me, as long as the objective of satisfying the requirements of the power grid OMD is realized or achieved, and everything is complied with in the franchise terms, there is no problem with making money because no private corporate entity was organized to lose money.

Alabanza sarcastically asked, “when did making money [become] so demonized?” It was a combination reply-question to Senator Raffy Tulfo as to why money earned by NGCP for its lawful and perhaps efficient operation went to dividend releases instead of using the income or profit to improve and expand its services to cover more area deemed underserved.

Tulfo, apparently, for added spice, for extra media mileage, included the ownership and national security issues to his inquiry as Senate Committee chair.

But we will tackle the lingering issue of security and of Chinese ownership, next time.

Well, let The Bridge provide the proper context. My understanding is that NGCP is a privately owned corporate entity whose nature and motive of organization and existence is to make money. That’s absolute. NGCP, even as a public utility, its main occupation is to make money and generate profits from operating, maintaining and developing (OMD) the state-owned power grid in accordance with the franchise’s terms and conditions provided for in the award to NGCP by government.

Prior to the privatization, the transmission system was operated and maintained by the National Transmission Corp. (Transco), a GOCC. In January 2009, NGCP started the OMD of an interconnected system that transmits gigawatts of power at thousands of volts from where it is produced to where it is needed, especially, of course, to the more depressed and isolated areas of the land. Ironically, we suffer from exorbitantly high electricity rates.

So, from 2009, or five years later since its takeover of the power grid’s OMD, from 2014, 2015, 2017, 2019 and 2022, NGCP, the private entity, made no less than P104.4 billion. Huge, as in huge money made from only a mere capital outlay, from available figures given by NGCP themselves, amounting to P61 billion. The profit cited above does not exclude yet what they made in year 2020 and 2021.

On a year-on-year basis, NGCP was easily making an average of P20.88 billion. During the Covid pandemic period from 2020 to 2021, NGCP did not give us the figures. But they may have probably made just half of the annual average due to the nationwide downfall in economic and production activities during the period.

On dividends, NGCP owners, according to Alabanza, made P91 billion during the last five years. Of the P104.4 billion generated income from the governmentowned transmission assets, tycoon Sy and his co-owners, harvested P18.2 billion annually.

Alabanza justified “that their dividends and net income may not necessarily line up,...profits or dividends are taken from retained earnings, which have accumulated over the year so it’s not a one is to one.”

With so huge a profit generated in a short period of time, and nothing is on record that NGCP incurred losses at any given year from start of operations up to the present, I think there’s basis for others who are envious of NGCP, in particular Tulfo, and quoting him tells us much with the words “mapapa-sana all ka na lang talaga.”

With the huge amount of money raked in by the fortunate franchise owners from a government that even enacted a law called EPIRA (Electric Power Industry Reform Act) or RA 9136 perhaps not directly to ensure huge profits to the franchisee, but providing an efficient and responsive power grid entity, as an undercurrent, who is now to blame? Is it demonic to make money from legitimate business? I don’t think so.

For me, as long as the objective of satisfying the requirements of the power grid OMD is realized or achieved, and everything is complied with in the franchise terms, there is no problem with making money because no private corporate entity was organized to lose money.

But considering the limitations under RA 9136, where it excludes the development of nuclear power generated energy, President Marcos said it is “outdated” and is suggesting amendment to ensure supply at low cost in recognition of the fact that our current energy cost is one major obstacle to the progress of all Filipinos and the national development, in general.

Mr. President Marcos, the Philippine Ports Authority remains deaf to the complaints of losing bidders that the specifications were tailor-fitted to the security agency currently in contract with PPA. Perhaps, you can do something about the complaints.