On Feb. 19 this year, the Singapore International Arbitration Centre (SIAC) ruled in favor of NGCP, affirming the validity of its P57.9-billion prepayment and rejecting allegations of nationality violations, major shareholder Synergy Grid & Development Philippines said in a stock exchange filing (SGP).
What happened before?
NGCP’s P57.88-billion prepayment to PSALM in 2013 settled future financial obligations under its concession agreement ahead of schedule.
In 2018, PSALM rejected NGCP’s P57.88-billion prepayment, claiming it was invalid because NGCP still had outstanding obligations to TRANSCO.
This dispute also arose despite the arrangement being previously agreed upon under an earlier administration, leading to a prolonged legal battle.
Big picture
This ruling eliminates legal uncertainties surrounding NGCP’s operations, allowing the company to focus on grid modernization, improving service reliability, and pursuing expansion projects.
The decision also strengthens its financial standing by reducing obligations and securing compensation for past expenses.
This arbitration ruling comes at a pivotal time for NGCP, as Maharlika Investment Corp. (MIC) moves to acquire an effective 8-percent stake in the company through its investment in SGP, led by tycoons Henry Sy Jr. and Roberto Coyiuto Jr.
What happens next?
With this final and binding ruling, NGCP maintains its authority over the country’s power grid, while PSALM and TRANSCO are now legally obligated to comply with the decision.
The ruling also reinforces NGCP’s financial stability by reducing future concession fees and securing compensation for certain expenses.
Breaking down the financial impact
• P57.88 billion prepayment upheld – The tribunal ruled that NGCP’s 2013 prepayment was valid, and PSALM had waived any right to contest it.
• NGCP required to pay only P372.77 million – Out of PSALM and TRANSCO’s P3.9 billion claim, NGCP was found liable for just 10 percent of the amount, significantly reducing financial obligations.
• Concession fee adjustment in NGCP’s favor – The tribunal upheld NGCP’s proposed exchange rate of 1 USD = P49.62 for project-related costs, instead of PSALM’s higher rate of P52.67, leading to a reduction in NGCP’s required payments.
• PSALM and TRANSCO ordered to indemnify NGCP – NGCP will receive P56.5 million plus interest for right-of-way expenses incurred in its operations.
• Reduction in Concession Fee for Sub-Transmission Assets (STAs) – NGCP will receive a corresponding concession fee reduction for STAs that were still under negotiation at the time of the bid.
• P51.8 million reimbursement – TRANSCO must reimburse NGCP for retained obligations.
Clearing NGCP’s name, strengthening control
The arbitration tribunal dismissed allegations that NGCP violated nationality restrictions under the Philippine Constitution and the Anti-Dummy Law, ruling that the company fully complied with ownership and legal requirements.
The ruling also reinforced NGCP’s operational independence, confirming that:
• NGCP has the exclusive right to use transmission assets during the concession period, including for telecommunications and related businesses
• NGCP alone is responsible for preparing the Transmission Development Plan (TDP), and TRANSCO has no authority to intervene or require prior approval
• Title to all property rights acquired under eminent domain will be registered under TRANSCO’s name, ensuring compliance with existing regulations
