Facing the Senate energy panel, the National Grid Corporation of the Philippines admitted early this week that majority of its income for the years of 2014, 2015, 2017 and 2019 went to dividends for its shareholders.
In 2019, the NGCP said its net income was P20.3 billion, of which P15B, or around 74 percent, went to dividends. In 2017, around 90 percent of its P20.6B net income went to dividends. For 2015, the NGCP distributed around 93 percent of its P22.5B net income as dividends.
Astonishingly, in 2014, the NGCP reported that its dividends exceeded its net income with P24B being handed to shareholders even if it only earned P22B for the year.
“It appears that a huge sum really goes to dividends,” Senate energy panel chairperson Raffy Tulfo said.
NGCP spokesperson Cynthia Alabanza explained that their dividends and net income may not necessarily line up as profits or dividends are taken from retained earnings which have accumulated. However, Senator Tulfo noted that a bigger amount goes to dividends instead of being reinvested for development.
“Only in the Philippines is transmission for profit. It should be not-for-profit,” he said.
“You prioritize income over improving services by installing proper transmission lines,” Tulfo added.
However, NGCP data also showed that its capital outlay was P39B in 2019 and P22.8B in 2017, which is actually more than the dividends it paid out in those years. According to the ERC, P12 billion of the NGCP’s P41 billion income in 2022 went to dividends.
Additionally, the Energy Regulatory Commission also said the NGCP has been spending higher on capital expenditures, although it asked why its projects have not been completed despite this spending.
Learning that a huge chunk of the NGCP’s income goes to dividends, along with the amounts involved, which regularly run in the billions, gives us an idea why the privatization of juicy power sector assets is so attractive for businessmen. Operating as business meant the people running NGCP could earmark almost P100B for dividends over the past decade. Had it had stayed government owned or a non-profit, and granted there were no leakages due to mismanagement, inefficiency, or corruption, those are billions that could’ve gone into system improvements that could directly benefit the stability, reliability, and quality of the grid, benefiting the Filipino consumer and the economy greatly.
The dividend situation at the NGCP should give us pause when it comes to handing over our power sector assets to big businesses whose priorities may not be aligned with consumers.*
