"The Maharlika-NGCP Deal: A Recipe for Regulatory Chaos?

The Maharlika-NGCP Deal: A Recipe for Regulatory Chaos?

As we venture into uncharted territories, it's essential to navigate potential pitfalls. The recent deal between Maharlika Investment Fund (MIF) and National Grid Corp. of the Philippines (NGCP) has raised concerns about regulatory chaos. In this blog post, we'll delve into the significance of this agreement and explore its potential implications on the power sector.

The Deal: A Blurred Line between Regulator and Investor

Maharlika Investment Fund, a government-owned and -controlled sovereign wealth fund, has acquired a 20% stake in NGCP. This move blurs the lines between regulator, operator, and investor, raising questions about potential conflicts of interest and institutional uncertainties.

Regulatory Capture: A Real Concern

House Senior Deputy Minority Leader Paul Daza warns that this deal may lead to "regulatory capture," where regulatory agencies become biased towards the industries they regulate. In this case, the Energy Regulatory Commission (ERC) may be compromised in its ability to regulate NGCP fairly and impartially.

The Significance of Republic Act 9136

Republic Act 9136, or the Electric Power Industry Reform Act, aimed to promote competition and efficiency in the electric power industry by segregating it into four sectors: generation, transmission, distribution, and supply. While generation remained competitive and open, transmission and distribution remained regulated, subject to the rate-making powers of the ERC.

A Recipe for Politicization and Erosion of Independence

This deal may result in politicization and erosion of independence in decision-making. Daza emphasizes the need for measures such as:

Enforcing strict independence and impartiality
Ensuring transparency in all regulatory decisions, including public disclosure of rate-setting
Implementing firewalls between MIF and NGCP's management decisions
Maintaining Congressional oversight

Conclusion: A Call to Action

As we navigate uncertain terrain, it's crucial to be prepared for unexpected situations. The Maharlika-NGCP deal raises important questions about regulatory oversight and accountability. It's essential that we take a proactive approach to ensure transparency and impartiality in decision-making. By doing so, we can prevent potential fiascos in the critical power sector.

Keywords: Maharlika Investment Fund, National Grid Corp. of the Philippines, NGCP, Electric Power Industry Reform Act, Republic Act 9136, Regulatory Capture, Independence, Transparency, Congressional Oversight

Edward Lance Arellano Lorilla

CEO / Co-Founder

Enjoy the little things in life. For one day, you may look back and realize they were the big things. Many of life's failures are people who did not realize how close they were to success when they gave up.