After a long battle to seal its acquisition of the state-owned National Transmission Corp. (Transco), the Filipino-Chinese consortium National Grid Corporation of the Philippines (NGCP) is set to settle its required $1 billion downpayment to the Philippine government this week, a source from NGCP said.

The $1 billion represents the 25 percent upfront payment for its $3.95 billion offer, which was the highest bid during the auction in December 2007. (The auction was hit by the business sector as rigged.)

NGCP has supposedly remitted to PSALM a check worth $592.5 million but PSALM is said to be waiting for the check to be cleared before they announce the payment. The State Grid Corp. of China reportedly plans to remit its share of the bid--40 percent of the 25 upfront payment or $395 million--this week.

The remaining balance of the bid offer will be paid on a semi-annual basis over a period of 20 years.

Also under the terms of the sale, NGCP will have to assume the $800 million capital expenditure of Transco for the near-term.

The NGCP source, who requested anonimity, said they are ready to take over the power transmission company's operations this month.

"We are ready to take over by January 15. We are excited and honored to be given the privilege of managing the national transmission grid," the source said.

President Arroyo signed into law in December 2008 Republic Act No. 9511 or the “Act Granting the National Grid Corp. of the Philippines (NGCP) a Franchise to Engage in the Business of Conveying or Transmitting Electricity through High Voltage Back-Bone System of Interconnected Transmission Lines, Substations and Related Facilities, and for other purposes.”

The NGCP is composed of the Philippine’s Monte Oro Grid Resources Corp. and Calaca High Power Corp. in partnership with China’s State Grid Corp. It was granted a 50-year concession contract.

Transco has the unique and crucial role of linking power plants owned by the National Power Corp. (Napocor) and independent power producers (IPPs) to the country's 123 distribution utilities and electric cooperatives, which in turn deliver electricity to end-users.

Transco also assumes the electrical transmission functions of Napocor including the planning, construction and centralized operation and maintenance of high-voltage transmission facilities, grid interconnections and ancillary services.

Under the Electric Power Industry Reform Act of 2001, commercial activities that involve power distribution and, in the case of Transco, transmission are natural monopolies so investors in these capital-intensive activities are assured returns.

The buyer of Transco needed to bag congressional approval to be granted the exclusive concession to operate the business.

The NGCP source said, "We promise to bring in higher level of efficiency, transparency and financial viability to the company."

NGCP was incorporated in February 22, 2008 with a capital stock of P2 billion, of which P500 million has been subscribed and paid-up by shareholders of the company.

Monte Oro is controlled by Walter Brown group and is engaged in mining, energy exploration and infrastructure projects. It is also involved in government privatization or similar projects, whether as proponent, equity investor or financial or technical advisor.

Calaca High Power, on the other hand, is run by the Coyuitos. It is in the business of operating, managing, maintaining and rehabilitating energy systems and services for gas, steam and electricity.

State Grid manages and owns China's transmission highway. It is the second largest state owned enterprise in China with more than 145 million customers and annual revenue of more than $107 billion.