MIC: Maharlika’s maiden investment in NGCP can help lower power rates

Manila, Philippines – The Maharlika Investment Fund (MIF) has made its first major investment in the country’s power sector, aiming to enhance energy security and reduce electricity costs, the Department of Energy (DOE) announced on Tuesday, January 28.
Investment in National Grid Corporation of the Philippines (NGCP)

Rafael Consing Jr., president of the Maharlika Investment Corporation (MIC), which manages the sovereign wealth fund, stated that this investment would contribute to a more stable power supply by supporting the National Grid Corporation of the Philippines (NGCP) in expanding and upgrading its transmission infrastructure.

Energy Secretary Raphael Lotilla emphasized the importance of such investments, citing the successful completion of the Mindanao-Visayas Interconnection Project in 2024 as an example. The project allowed Mindanao, which had an excess power capacity of 800 megawatts, to transmit 400 megawatts to the Visayas and Luzon regions, significantly lowering wholesale electricity spot market (WESM) prices.

“With more of these projects being implemented, we can eliminate barriers in electricity supply,” Lotilla explained. “Before, Mindanao had an overcapacity of 800 megawatts. Now, with the completion of the interconnection project, 400 megawatts are being exported to Visayas and Luzon.”

As part of its investment, the MIC will hold two board seats in Synergy Grid & Development Philippines (SGP) and NGCP, giving it a role in aligning NGCP’s future projects with national development goals.

Details of the Acquisition
The sovereign wealth fund secured a 20% stake in NGCP through a binding agreement with SGP, amounting to ₱19.7 billion at approximately ₱15 per preferred share. The MIC will have the option to convert these shares into common stock after three years, potentially yielding an 8% dividend.

SGP, controlled by business tycoons Henry Sy Jr. and Robert Coyiuto Jr., currently holds a 40.2% ownership stake in NGCP. The acquisition process is expected to take around 180 days, covering thorough due diligence and regulatory approvals.

Although the MIC will not be directly involved in NGCP’s daily operations, it aims to play a significant role in its governance, ensuring transparency and efficiency in grid operations. The MIC will gain access to NGCP’s financial records and an overall perspective on its management.

Interest in Chinese Stake in NGCP?
While the MIC is not currently in discussions to acquire shares from China’s State Grid Corporation, which owns a 40% stake in NGCP, Consing noted that the sovereign wealth fund would consider purchasing those shares if the opportunity arises.

Energy Secretary Lotilla highlighted that the government’s presence on the NGCP board would provide greater transparency in its operations, particularly regarding cybersecurity and national security concerns.

“If NGCP says there’s nothing to be concerned about, then we’ll be in a better position to verify that. On the other hand, if there are issues that need to be addressed—such as cybersecurity threats to the country’s transmission lines—the government will be better equipped to respond,” Lotilla said.

Addressing Concerns in NGCP Operations
The MIC’s investment comes amid growing concerns regarding NGCP’s performance and governance. Lawmakers have raised issues over the influence of the Chinese grid operator in NGCP’s operations, prompting the House legislative franchises committee to demand a copy of NGCP’s shareholder agreement during a hearing on January 14.

Additionally, the Energy Regulatory Commission (ERC) recently imposed a ₱15.8-million fine on NGCP due to significant delays in 33 of its 37 transmission projects.

Despite these concerns, Consing reassured the public that the MIC had conducted preliminary due diligence before finalizing its investment decision. He also projected a 6.5% dividend yield on the investment over the first three years. However, he declined to disclose a specific timeline for returns, citing the potential impact of such information on SGP’s publicly traded stock.

Following the investment announcement, SGP temporarily halted trading at 9:30 a.m. on Tuesday. By the time trading resumed, SGP’s share price had surged by 8.20%, reaching ₱11.88 per share.