By Karen Lema
MANILA (Reuters) – The Philippines’ sovereign wealth fund would be interested in buying a Chinese state firm’s stake in the Southeast Asian country’s power transmission operator, its president said on Tuesday, as the government seeks to boost its oversight of the national power grid.
The wealth fund, Maharlika Investment Corp, announced on Monday it would buy a 20% stake in the National Grid Corp of the Philippines, or NGCP, which in 2007 won a 25-year concession to be the Philippines’ sole power transmission operator.
Maharlika president and chief executive officer Rafael Consing Jr said the fund would also be interested in shares held by China State Grid Corp, but noted that taking control of NGCP was not the fund’s motivation when it decided to buy into it.
“The objective was not to take control, but rather just to be able to achieve some level of influence, and you achieve that by way of your board seats,” Consing told a press conference.
Some Philippine legislators have in recent years warned about potential security risks from a Chinese state firm’s involvement in the power grid, as well as Chinese-backed players in the telecoms market.
“If it becomes available, I think so yes,” Consing said when asked about the Chinese stake, adding no approach had been made to the firm.
China’s State Grid Corp could not immediately be reached for comment.
China’s State Grid has a 40% stake in NGCP, and the remaining 60% is effectively controlled by Synergy Grid & Development Phils Inc. (SGP) through a common corporate structure of the latter’s two largest Filipino shareholders, tycoons Henry Sy Jr. and Roberto Coyiuto Jr.
Maharlika’s interest comes at a time of heated maritime rivalry and deepening mistrust of China, which has opposed some recent moves by the Philippines to boost its defence collaboration with ally the United States, including use of its Typhon missile system.
NGCP is also currently the subject of a congressional probe into its compliance with franchise obligations and its ownership.
With a 20% stake, Maharlika will be able to subscribe to preferred shares offered by SGP, which would give the wealth fund two seats each at NGCP and SGP.
Consing said Maharlika’s presence in NGCP would also allow the government to monitor external threats “if such threats indeed arise”.
Energy Secretary Raphael Lotilla at the same press conference said the fund’s involvement in the grid would pave the way to more efficient power transmission, potentially lowering power costs.
Maharlika will acquire the preferred shares for 19.7 billion pesos ($336.64 million), which will provide the fund with an annual 6.5% dividend yield for the first three years, Consing said.
($1 = 58.5200 Philippine pesos)
(Reporting by Karen Lema; Editing by Martin Petty)
