By Sheldeen Joy Talavera, Reporter
THE NATIONAL Grid Corp. of the Philippines (NGCP) claimed victory on its arbitration case against state-run Power Sector Assets & Liabilities Management Corp. (PSALM) and the National Transmission Corp. (TransCo) over its obligations under a concession agreement.
In a stock exchange disclosure on Monday, Synergy Grid & Development Phils., Inc. (SGP), which holds a 40.2% effective ownership interest in NGCP, said that the Arbitral Tribunal of the Singapore International Arbitration Centre ruled in favor of NGCP in its final decision dated Feb. 19.
The Arbitral Tribunal declared that the NGCP did not violate the nationality restrictions in the Philippine Constitution and the Anti-Dummy Law — which restricted foreign ownership in public services.
It also rejected the defense made by PSALM and TransCo that this rendered NGCP’s claim to the validity of the prepayment or its other claims “inadmissible or unenforceable.”
“The Arbitral Tribunal likewise declared that NGCP did not breach its obligations under the Concession Agreement in relation to permitted indebtedness or insurance,” SGP said.
In 2018, NGCP filed an arbitration case against PSALM and TransCo in relation to the implementation and interpretation of the parties’ concession agreement.
In 2007, the NGCP secured the 25-year concession to operate the country’s power transmission network after an open, public and competitive bidding process. It officially started operations as a power transmission service provider in 2009.
In the arbitration case, the grid operator sought, among other things, a declaration that the payment made on July 15, 2013 amounting to P57.88 billion was valid, as well as the payment of other monetary claims of approximately P4 billion “which should have been borne by TransCo under concession agreement, but were advanced by NGCP.”
On the other hand, PSALM and TransCo argued that NGCP was in “concession default” for having allegedly violated the national restrictions for public utilities under Philippine law and the concession agreement.
The state-run firms also disputed NGCP’s monetary claims and sought counterclaims of P2.7 billion as part of TransCo’s excluded receivables, plus interest.
In its final decision, the Arbitral Tribunal directed NGCP to pay TransCo approximately P372.77 million out of the P3.9 billion claimed.
For projects under construction, it said that the agreed difference of P13.12 billion, which, after accounting for escrow funds, is P10.1065 billion, must be converted to US dollars in order to calculate the requisite concession fee adjustment.
Meanwhile, the Arbitral Tribunal directed PSALM and TransCo to indemnify NGCP up to P56.53 million for expenses on right-of-way acquisition, as well interest of 6% per annum until payment is full.
TransCo, on the other hand, was obliged to reimburse NGCP for the former’s retained obligations at P51.84 million, with interest of 6% per year.
“Under the UNCITRAL (United Nations Commission on International Trade Law) Rules, the Tribunal’s award is final and binding on the parties and the parties undertake to carry out the award without delay,” SGP said.
Sought for comment, PSALM President and Chief Executive Officer Dennis Edward A. Dela Serna said that the matter has been referred to the Office of the Government Corporate Counsel (OGCC) as counsel for PSALM and TransCo for appropriate actions.
“We want to assure the public that both PSALM and TransCo are fully committed to protecting the interests of the Filipino people and that we will act in accordance with law,” he said in a Viber message.
TransCo President and CEO Fortunato C. Leynes likewise said that they are waiting for OGCC’s advice on the next course of action.
Following its disclosure of the decision of the Arbitral Tribunal, SGP requested a voluntary halt in trading of its shares at 9:30 a.m. on Monday. It was lifted one hour after.
Shares in SGP closed at P11.70 each, down 4.1% or 50 centavos.
