Law Summary
Terms and Conditions of the Franchise
- The franchise is granted for fifty (50) years from the act's effectivity.
- Franchise subject to amendment, alteration, or repeal by Congress for the common good.
- At least 60% ownership of the Grantee’s capital must be held by Filipino citizens.
- Must comply with constitutional and legal foreign ownership restrictions on public utilities.
Manner of Operation of System or Facilities
- Transmission system and facilities must be operated and maintained according to industry standards.
- The Grantee must comply with modifications, improvements, or changes required by the Energy Regulatory Commission (ERC) to keep pace with scientific and service advancements.
Right of Eminent Domain
- Authorized to exercise eminent domain to acquire private property necessary for transmission system construction, expansion, maintenance, and operation.
- Must comply with legal procedures including just compensation and prerequisites before taking possession.
Right of the Government
- The President may temporarily take over or operate the transmission or subtransmission systems during war, rebellion, public peril, calamity, emergency, or disaster.
- Temporary suspension or government agency operation of facilities authorized with due compensation to NGCP.
Sale, Lease, Transfer, Usufruct, etc.
- The franchise and associated rights may not be leased, transferred, granted usufruct, sold, or merged without Congress approval.
- Exceptions include stock share transfers for dispersal of ownership, capital stock increases, or corporate stockholder level transactions complying with constitutional limitations.
- Transfers of related business operations like telecommunications are allowed under conditions.
Cross-Ownership; Market Power Abuse and Anti-Competitive Behavior
- The Grantee is prohibited from engaging in anti-competitive practices such as cross-subsidization, price manipulation, or unfair trade.
- Strict prohibition on cross-ownership between the Grantee and any "Power Industry Player," including stockholders, directors, officers, or relatives within the fourth civil degree of consanguinity and their spouses.
- Exceptions apply for minimal shareholdings (1%) in companies listed on the Philippine Stock Exchange.
- Shares acquired in violation have no voting rights or shareholder benefits during the prohibited period.
- Losing bidders for the TRANSCO operation franchise and their affiliates are barred from owning or benefiting from NGCP shares for ten years.
- "Affiliate" and "control" are legally defined within the context of ownership and management powers.
Dispersal of Ownership
- NGCP must publicly list and offer at least 20% of its outstanding shares in the Philippine Stock Exchange within ten years from commencement of operations.
- Full compliance can be satisfied if a company owning at least 30% of NGCP’s shares is listed in PSE.
- Extensions can be granted by the ERC if market conditions are unfavorable.
Tax Provisions
- NGCP shall pay a franchise tax amounting to 3% of gross receipts from franchise operations.
- This tax replaces income tax and other taxes related to the franchise or its properties but excludes real estate, buildings, and personal property taxes.
- Payments of concession fees to PSALM are exempt from income tax and VAT.
Acceptance and Compliance
- The Grantee must formally accept the franchise in writing within 60 days of the law’s effectivity.
Warranty in Favor of Government
- NGCP shall indemnify national and local governments against claims arising from accidents or injuries caused by its transmission system operations.
Ingress and Egress
- Authorized to excavate and lay conduits in public areas with the approval of relevant government agencies and posting of bonds.
- Obliged to immediately repair and restore any disturbed public infrastructure at its expense, conforming to government standards.
Transfer of Personnel
- TRANSCO employees have preferential hiring rights by NGCP for a period of 165 days post-commencement, subject to qualification and position availability.
- TRANSCO employees retain benefits under EPIRA, along with possible additional benefits.
Applicability Clause
- NGCP is subject to provisions of the Public Services Act as not amended or repealed by the Electric Power Industry Reform Act of 2001.
Reportorial Requirement
- NGCP must submit an annual report on its finances and operations to the Congress of the Philippines.
Separability Clause
- Should any part of the Act be declared unconstitutional or invalid, remaining provisions continue in full force.
Effectivity Clause
- The law takes effect fifteen (15) days after publication in at least two newspapers of general circulation upon NGCP’s initiative.