NGCP, DICT reach deal on fiber optic network use in broadband

PRIVATELY OWNED National Grid Corp. of the Philippines (NGCP) said it had reached a “mutual decision” with the Department of Information and Communications Technology (DICT) on “the way forward” for the use by third parties of the fiber optic capacity installed within the country’s power transmission system.

In a statement, NGCP said DICT officer-in-charge Undersecretary Eliseo M. Rio, Jr. had committed to partner with the grid operator on the use of the power transmission backbone for the national broadband program (NBP) for the duration of the company’s concession.

It said the commitment was reached after Henry Sy, Jr., NGCP president and chief executive officer, met with Mr. Rio.

NGCP’s statement is the latest development in the continuing issue involving the use of the fiber optic cable network, which enables real-time communication between transmission facilities, and with power generation companies and distribution utilities.

National Transmission Corp. (TransCo), an agency attached with the Department of Energy (DoE), previously asked to audit the network but was turned down by NGCP.

On Tuesday, NGCP said it would enter into an agreement up to the life of its concession, which it placed to be in 2034, “provided that in the event that the Concession is extended, the bilateral agreement will also be extended.”

NGCP will not object to any separate agreement DICT signs with TransCo “for so long as the exclusive rights of the company in relation to transmission and related businesses, for the entire duration of its concession are upheld.”

It quoted Mr. Rio as saying: “The core of the matter is who owns the dark fiber of NGCP/TransCo. When it is turned over to TransCo, whatever agreement was done with NGCP may be modified, changed, or reviewed by TransCo.”

NGCP’s franchise stems from the passage of Republic Act 9136 in 2001 or the “Electric Power Industry Reform Act of 2001” (EPIRA), which paved the way for the sale of government energy assets.

The law separated the different components of the sector, including power transmission, which was spun off to state agency TransCo ahead of its turnover to the private sector through concession.

Unlike outright sale, the concession agreement allowed the government to keep ownership of the transmission assets through TransCo. NGCP started operating the grid in 2009.

In its statement, NGCP said the fiber optic capacity to be leased out by the company uses transmission facilities. It said allowing the government or third parties to “piggy-back” on this transmission communication backbone would be critical in the immediate implementation of this government’s national broadband program.

“We are not interested in entering the telecommunications business. Transmission operations remain the primary business of NGCP. The lease of available fiber optic capacity is specifically allowed under our concession as a ‘related business to maximize the utilization of its assets.’ Such lease agreement is contemplated by our concession and franchise and is not considered our primary mandate,” it said.

NGCP said its available fiber optic capacity could support both the needs of the government and a private party.

“Should the government use only a portion of the fiber optic capacity available for use of third parties, NGCP may also enter into other bilateral contracts with interested telecommunication companies based on the contract with government, for the use of the remaining capacity.

Under the EPIRA, 50% of the net income from these bilateral contracts will be used to reduce transmission rates. But priority use remains with NGCP’s internal communications purposes and the government’s NBP.”

Separately, DoE Secretary Alfonso G. Cusi he was amenable to a tripartite contract among NGCP, TransCo and DICT for the national broadband plan to move forward.

“Tripartite na lang para wala ng gulo. ’Yan na lang ang solution. Then I called for a meeting here [DoE office]. Unfortunately, Mr. Sy was not able to attend in the meeting,” he told reporters.

“Unable for me to ask the question, I wrote him later . . . I raised three questions there, sinagot ako ‘no’ lahat. So I referred that back to TransCo,” he said.

Mr. Cusi said as the owner of the transmission facility, TransCo should be involved in the project because after the end of the concession, ownership reverts to the government agency.

He said NGCP has 16 remaining years on its lease, which may not be attractive for any interested third-player in the local telecommunications industry.

“TransCo is supposed to get back the facilities,” he said.


(February 20, 2018). NGCP, DICT reach deal on fiber optic network use in broadband. Business World. Retrieved from

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