NGCP questioned over passing cost of unfinished projects to public

MANILA, Philippines — Two congressmen on Monday questioned the National Grid Corporation of the Philippines (NGCP) for allegedly passing the cost of unused and unfinished capital expenditure (CAPEX) projects onto Filipino power consumers.

Rep. Dan Fernandez and Deputy Speaker David Suarez brought the matter up at the House legislative franchises’ hearing, with Fernandez calling the practice unfair and detrimental to the public and demanding immediate reforms.

“Parang ‘yung mga project na ginagawa pa lang ng NGCP eh hindi pa po nagagamit, hindi pa siya useful, hindi pa siya commissioned, hindi pa natin makikita na siya ay efficient dahil hindi pa siya tapos, sinisingil na natin sa taumbayan,” Fernandez said, underscoring the inequity of charging consumers for incomplete projects.

(It’s like the projects that NGCP is still working on aren’t being used yet, they’re not useful, they’re not commissioned, and we can’t see that they’re efficient because they’re not finished, yet we’re already charging the public for them.)

Present at the hearing was Energy Regulatory Commission (ERC) Chairperson Monalisa Dimalanta who aired the same sentiment as Fernandez and revealed that the ERC’s minority position only allowed completed and commissioned projects to be included in the Regulatory Asset Base (RAB).

“As far as the minority is concerned, only the CAPEX amounts that resulted in actual assets. Hindi mo po kasi siya mabo-book as actual assets as if unless buo na po yung project eh (You can’t book it as actual assets unless the project is complete),” she explained.

However, Dimalanta disclosed that the ERC majority approved the inclusion of CAPEX based on an “as spent” approach, a decision that Fernandez deemed unacceptable.

“The decision po of the majority is to allow NGCP to recognize the CAPEX of the value ‘as spent,’ so it is the as-spent approach versus the completed and commissioned,” Dimalanta said.

This did not sit well with Fernandez, who emphasized that actions like this should not be allowed

“Hindi pwede ‘yun. Hindi pwe-pwedeng nagastusan na ng NGCP ‘yung proyekto na hindi naman natin nagagamit ‘yung pino-produce nilang energy eh kinakarga na ng taumbayan,” he said.

(That’s not acceptable. It’s not right that NGCP has already spent on a project we’re not using, and yet the public is already shouldering the cost of the energy they’re producing.)

“Don’t you think that this is wrong and highly immoral na hindi pa nagagawa ‘yung mga project, hindi pa siya nacoconsume, hindi pa siya napapatunayang efficient [ay] binabayaran na siya ng taumbayan?” he later on asked.

(Don’t you think it’s wrong and highly immoral that the projects aren’t even completed, they’re not being used, they haven’t been proven efficient, yet the public is already paying for them?)

READ: House to conduct motu proprio inquiry into NGCP franchise 

Suarez also questioned the unfinished CAPEX projects allegedly used to “burden” Filipinos and asked at the hearing whether there’s truth to claims that these projects are already being paid for by the public, to which Dimalanta confirmed yes.

“Meron pong — hindi naman po lahat (There are some, but not all),” she said. Suarez then asked about the “logic” behind such a move.

“’Yun po kasing sistema po yung regulatory framework governing transmission and distribution supposed to be forward-looking po yan. Isasubmit nila yung mga plano nilang proyekto over the next 5 years, may budget sila doon [at] bibigyan sila ng authority to collect based on an annual breakdown of the approved budget,” said Dimalanta.

(The system, or the regulatory framework governing transmission and distribution, is supposed to be forward-looking. They submit their project plans for the next five years, with a budget included, and are given authority to collect based on an annual breakdown of the approved budget.)

“Technically, pwede po under the current framework na kahit di pa tapos nakakapaningil sila unti-unti,” she added.

(Technically, under the current framework, they can charge incrementally even if the project is not yet finished.)