NGCP denies violating concession agreement

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THE National Grid Corporation of the Philippines (NGCP) denied it had violated the provisions of its concession agreement by installing telecommunications facilities along the grid without the consent of state-run National Transmission Corp. (TransCo), owner of the country’s power transmission assets.

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NGCP said the concession agreement allows it to conduct related businesses that will maximize the use of existing assets.

Earlier, TransCo President and CEO Melvin A. Matibag claimed that NGCP was benefiting from the embedded fiber optic in the grid by tapping private telecommunication companies in the system and implemented such without the knowledge or consent of the Power Sector Assets and Liabilities Management Corp. (PSALM), Energy Regulatory Commission (ERC), and TransCo.

But Cynthia Alabanza, NGCP spokesperson and adviser for external affairs, said in a briefing on Friday that NGCP is not legally required to get prior approval from PSALM, TransCo or ERC because it is still within the bounds of conducting related businesses.

She cited Section 8 of the concession agreement, which says that “the concessionaire shall not, without PSALM’s prior written consent: enter into any business other than activities required and permitted under this agreement or undertaken in connection with related business.”

Alabanza said NGCP uses a fiber optic network to synchronize the internal operations and communication of its almost 200 substations, control center, balancing power supply and demand in real time.

The NGCP official also said that under Republic Act (RA) 9511 or the NGCP Franchise Act, Section 1: Nature and Scope of Franchise, “The Grantee [NGCP] is authorized to engage in and construct, install, finance, improve, expand, rehabilitate, and repair the nationwide transmission system and the grid of the Republic of the Philippines, ancillary business and any related business which maximize utilization of its assests such as, but not limited to, telecommunication system, pursuant to Section 20 of RA 9136 (Electric Power Industry Reform Act [EPIRA] of 2001)”.

Alabanza disputed the claim of TransCo that NGCP is allowing the telecom companies to use the property intended only for transmission companies.

Telecoms use NGCP facilities via co-location agreements inherited from TransCo, she said.

“NGCP has co-location agreements with telecom companies such as Smart and Globe, same as with PAGASA, for exchange of on-time weather advisory. The agreement states that these entitles can piggy-back with our right-of-way or existing facilities, but they are not tapping or using our fiber optic cables,” Alabanza said.

“NGCP earns nothing from fiber optic rentals,” she emphasized.

The related business, which is co-location of third party equipment within NGCP facility or premises, was simply inherited from TransCo and continued by NGCP, she said.

There are currently 18 co-location sites assumed from TransCo and these were only contracted under the term of the NGCP.

The 50 percent of earnings derived by NGCP from utilizing assets (earning from co-location activities and rentals) are used to lower transmission rates in full compliance with the provisions of the EPIRA law and the concession agreement.

“NGCP reiterates that it does not earn anything from existing fiber optic facilities. The main purpose of the network is for the delivery of efficient power transmission services. However, NGCP remains open to transaction with any entity who is interested to develop the national broadband network, with the national government as our priority,” Alabanza said.

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