QuestionsQuestions (Republic Act No. 9511)
RA 9511 grants NGCP (and its successors/assigns) a franchise to operate, manage, and maintain, and to construct, install, finance, improve, expand, operate, maintain, rehabilitate, repair, and refurbish the nationwide electric transmission system—high-voltage backbone system of interconnected transmission lines, substations, and related facilities—within the Transmission Development Plan, subject to amendments/modifications approved by the Department of Energy. The scope is nationwide.
The franchise term is fifty (50) years from the date of effectivity. It is granted subject to the condition that Congress may amend, alter, or repeal it when the common good so requires.
At least 60% of the capital of NGCP must be owned by Philippine citizens, and NGCP must comply with the Constitution and applicable laws on foreign ownership and management of public utilities.
NGCP must operate and maintain the transmission system, grid, and related facilities in accordance with industry standards. It also has the duty, whenever required by the Energy Regulatory Commission (ERC) or its legal successor, to modify, improve, and change the system/facilities to the extent reasonably required by advances in science and improvements in electric power services.
NGCP is authorized to exercise eminent domain insofar as it is reasonably necessary for construction, expansion, and efficient maintenance and operation of the transmission system and grid, and efficient operation and maintenance of subtransmission systems not yet disposed by TRANSCO. It may acquire only private property actually necessary for the franchise purposes, and it must observe applicable eminent domain law—especially prerequisites of taking possession and the determination and payment of just compensation.
During war, rebellion, public peril, calamity, emergency, disaster, or disturbance of peace and order, the President may temporarily take over and operate the transmission or subtransmission systems, temporarily suspend operation of any portion/facility for public safety/security/public welfare, or authorize temporary use and operation by any government agency upon due compensation to NGCP for such use during the period of operation.
NGCP may not lease, transfer, grant usufruct of, or sell the franchise or rights/privileges, nor merge with another entity, nor transfer controlling interest without prior approval of Congress. However, exceptions exist for: (1) transfer/issuance of shares in implementing ownership dispersal requirements; (2) issuance of shares to foreign/local investors in connection with increases in authorized capital stock causing dilution; (3) transfers/sales/issuance of shares at the corporate stockholder level; (4) assignment/transfer of operation of related business such as telecommunications; and (5) transfers at stockholder level subject to constitutional limitations. Any transferee/assignee remains subject to the Act’s same conditions.
NGCP must not engage in anti-competitive behavior (e.g., cross-subsidization, price/market manipulation, unfair trade practices detrimental to contestable markets). It and certain persons (stockholders, directors, officers, relatives within the 4th civil degree consanguinity and their spouses) are barred from holding shares in any Power Industry Player, and vice versa—subject to specified exceptions and limitations.
Exceptions include: (1) cross-ownership may be allowed for relatives by blood or marriage if the relative has no employment/consultancy/fiduciary/contractual/commercial/economic relationship or interest in the relevant company; (2) ownership of PSE-listed Power Industry Player shares is allowed if not more than 1% of total outstanding shares; (3) ownership is allowed for not more than 1% in a PSE-listed company owning/controlling shares of NGCP; and (4) the owner’s holdings in any Power Industry Player are limited to not more than 1% as well.
Losing bidders (and their principals, subsidiaries, affiliates, stockholders, directors, and officers) are barred for ten (10) years from the effectivity of RA 9511 from becoming transferees or beneficial owners of NGCP shares/ownership rights. They are also prohibited from directly or indirectly acquiring or receiving any pecuniary interest in NGCP’s franchise operations for the same ten-year period.
NGCP must list (subject to SEC/PSE requirements) and make a public offering of shares representing at least 20% of its outstanding capital stock (or higher if later required by law) within 10 years from commencement of operations. If NGCP’s listing in the PSE of a company that directly/indirectly owns or controls at least 30% of NGCP’s shares occurs, that counts as full compliance. If not reached, NGCP may apply to the ERC, after notice and hearing, for a reasonable extension if market conditions are not suitable.
NGCP shall pay a franchise tax equivalent to 3% of all gross receipts derived from its operations under the franchise. This tax is in lieu of income tax and any and all taxes, duties, fees, and charges of any kind imposed by any authority on its franchise rights/receipts/revenues/profits and on properties used in connection with the franchise.
NGCP remains liable to pay the same taxes on its real estate, buildings, and personal property, exclusive of the franchise, as other corporations are required to pay under existing or future laws.
Payment by NGCP of concession fees due to PSALM under the concession agreement shall not be subject to income tax and value-added tax (VAT).
The franchise must be accepted in writing by NGCP within 60 days after the effectivity of the Act.
NGCP must submit an annual report of finances and operations to Congress. The separability clause provides that if any provision is declared unconstitutional or invalid, the remaining parts not affected remain in full force and effect.
RA 9511 takes effect 15 days from the date of its publication upon the initiative of the Grantee in at least two (2) newspapers of general circulation in the Philippines.