Press Release
October 1, 2008


Senate Minority Leader Aquilino Pimentel Jr. (PDP-Laban) today asked the government to protect the rights of hundreds of workers of the National Transmission Corporation (Transco) who are in danger of being laid off as a result of its privatization.

Pimentel expressed concern over a supposed plan of the National Grid Corp., which won the bid to operate the power transmission lines, that it could only absorb about 100 of the more than 600 employees at the Transco head office in Quezon City alone.

Transco used to be part of the National Power Corporation until it was created as a separate corporate entity upon the enactment of the Electric Power Industry Reform Act (Epira) in 2001.

The National Grid Corp. is a consortium composed of the Monte Oro Grid Resources Corp. and the State Grid of Hong Kong. Monte Oro, a Filipino company, owns 60 percent of the new power utility firm while the State Grid of Hong Kong owns 40 percent.

The winning bidder was awarded a concession to operate the power transmission system for a period of 25 years. In exchange, it will pay $3.95 billion to the government, $1 billion of which will be in the form of a down payment. The remaining $2.95 billion will be paid over a period of 20 years.

During the floor deliberation on the grant of a congressional franchise to the National Grid Corp. sponsored by Sen. Juan Ponce Enrile, it was revealed that the consortium has an authorized capital of P2 billion.

"With the huge proceeds from the Transco privatization, there should be no problem in the payment of separation benefits to company employees who will be terminated," Pimentel said.

The senator from Mindanao said it is significant to note that while the National Grid Corp. will operate the power transmission system, the existing transmission assets will still be owned by the government.

Pimentel said Enrile himself clarified that the National Grid Corp. is "simply a concessionaire, using the assets of Transco to run the business of Transco and pay a rent to Transco."

"That's a relief to know because I was of assumption really that the whole thing will be transferred to the new operator and thereby, in effect emasculate the government's hold on the power industry."

According to Enrile, the relationship between the National Grid Corp. and Transco is covered by a concession contract or agreement, which is incorporated as part of the congressional franchise.

That is somewhat similar as the concession agreements that the Metropolitan Waterworks and Sewerage System entered into with two private water concessionaries - the Maynilad Water for the west zone and the Manila Water for the east zone in Metro Manila.

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