New TransCo owners to remit initial $1-B payment to government

In preparation for the scheduled turnover this month, the National Grid Corporation of the Philippines (NGCP), the winning bidder for the state-owned National Transmission Corp.’s 25-year concession contract, is set to pay the National Government an initial amount of about $1 billion.

The amount represents its 25 percent upfront payment from the $3.95-billion offer it made for the operation and management of TransCo in an auction held on December 2007.

The local stockholders of NGCP, composed of Monte Oro Grid Resources Corp. and Calaca High Power Corp., have reportedly remitted a cheque to PSALM worth $592.5 million.

Industry sources said, however, that PSALM is still waiting for the cheque’s clearing before announcing the payment.

“We are ready to take over by January 15 and we are excited and honored to be given the privilege of managing the national transmission grid,” NGCP sources said.

According to industry sources, the Chinese partner in NGCP- State Grid Corp. of China- will remit today its portion of the bid offer, or 40 percent of the 25 percent upfront payment worth $395 million.

MOGRC, controlled by the group of businessman Walter Brown, is engaged in mining, energy exploration and infrastructure projects as well as in government privatization or similar projects, whether as proponent, equity investor or financial or technical advisor.

Calaca High Power, run by the Coyuitos, is in the business of operating, managing, maintaining and rehabilitating energy systems and services for gas, steam and electricity.

State Grid, on the other hands, manages and owns China’s transmission highway. It is the second largest state owned enterprise in China, with more than 145 million customers and annual revenues of more than $107 billion.

Under the terms of bidding, NGCP will pay 40 percent upfront cash after securing its franchise.

The remaining balance of the bid offer, meanwhile, will be paid on a semi-annual basis over a period of 20 years.

President Arroyo late last year signed into law the franchise bill application of NGCP.

NGCP was incorporated on Feb. 22, 2008 with an authorized capital stock of P2 billion, of which P500 million has been subscribed and paid-up by shareholders of the company.