The Arbitral Tribunal of the Singapore International Arbitration Centre (SIAC) ruled in favor of National Grid Corp. of the Philippines (NGCP) in the case it filed against state-run Power Sector Assets & Liabilities Management Corp. (PSALM) and National Transmission Corp. (TransCo).
NGCP majority shareholder Synergy Grid & Development Phils. Inc. (SGP) disclosed to the Philippine Stock Exchange Monday that the Arbitral Tribunal, in its final award on Feb. 19, 2025, declared that the transmission firm did not breach the nationality restrictions in the Philippine Constitution and the Anti-Dummy Law.
The court also rejected PSALM and TransCo’s defense that this rendered NGCP’s claim to the validity of the prepayment or its other claims inadmissible or unenforceable.
“Under the UNCITRAL [United Nations Commission on International Trade Law] rules, the tribunal’s award is final and binding on the parties and the parties undertake to carry out the award without delay,” SGP said.
NGCP filed for arbitration against TransCo and PSALM in 2018 after a dispute resolution in August 2017 failed to settle concerns over the grid operator’s concession agreement with the said agencies.
SGP said the arbitral tribunal declared that NGCP did not breach its obligations under the concession agreement in relation to permitted indebtedness or insurance.
It said the tribunal also declared that NGCP validly exercised its right to make the prepayment of P57.88 billion that it made on July 15, 2013, there then being “no amount due to PSALM or TransCo under this [concession] agreement [including the deferred payments] and other transaction documents that are in arrears.”
PSALM president Dennis de la Serna said the tribunal’s ruling was referred to the Office of the Government Counsel (OGCC) as counsel for PSALM and TransCo for appropriate action.
“We want to assure the public that both PSALM and TRANSCO are fully committed to protecting the interests of the Filipino people and that we will act in accordance with law,” de la Serna said.
SGP cited the decision of the arbitral tribune which said PSALM accepted the prepayment as valid and accordingly waived any its right and TransCo may have had to object to the validity of the prepayment, such that they were deemed to have accepted it as fully compliant with the requirements of the concession agreement.
The tribunal also declared that NGCP did not breach its obligations under the concession agreement in relation to permitted indebtedness or insurance.
SGP said the tribunal also awarded to TransCo only P372.77 million, significantly lower than its of claim of outstanding obligations in the amount of around P3.9 billion. The tribunal ordered the payment of these sums with interest at 6 percent per annum until payment in full.
It said that with respect to projects under construction, the agreed difference of P13.1206 billion, which, after accounting for escrow funds, is P10.1065 billion, should be converted into US dollars in order to calculate the requisite concession fee adjustment (thereby decreasing the concession fee to be paid by NGCP).
The tribunal upheld NGCP’s position that the appropriate conversion rate is P49.6 per U$1, rather than the P52.67 per US$1 contended by PSALM/TransCo.
It also ordered PSALM and TransCo to indemnify NGCP up to the amount of P56,530,022.51 for expenses on right of way claims, together with simple interest thereon at 6 percent per annum until payment in full.
The tribunal also declared that NGCP has, during the concession period, the exclusive right and responsibility of preparing the transmission development plan on an annual basis and is entitled to deal directly, and without intervention by TransCo, with the regulators.
The Tribunal declared that the concession granted by PSALM and TransCo to NGCP confers upon NGCP the exclusive right use the transmission assets during the concession period, including the right to use such assets for a related business, including for a telecommunications system.