Philippine wealth fund to prioritize energy projects

The Philippine energy sector will take the bulk of the initial investments of the country’s first sovereign wealth fund, according to the head of the Maharlika Investment Corp.

“Energy will be the first,” Maharlika Chief Executive Officer and President Rafael D. Consing, Jr. told a forum on Monday. “Energy will take in the bulk of the initial investments.”

He said energy, physical, and digital connectivity are key to “multigenerational growth.”

President Ferdinand R. Marcos, Jr. has touted the Maharlika Investment Fund as an engine to drive economic development through strategic investments both here and overseas. He has said his government considers the wealth fund as a means to cut dependence on foreign loans.

Mr. Consing said the fund’s first commitment would likely be to an energy-related project. “In terms of the amount we will commit for the year, I think a big portion of it really will be coming from energy.”

There is a need to invest in the energy sector due to the country’s high electricity costs and lack of access, he said. “Just take a look at the electricity numbers last year in terms of the availability and peak,” he said. “We barely have about anywhere between 20% and 50% in surplus electricity.”

The Maharlika Investment Corp.’s priority investment areas are power, agroforestry, industry, urbanization, mineral processing, tourism, transportation, and aviation.

Under power, it seeks to focus on renewable energy and new sources to diversify supply and stabilize prices and modernize the grid.

Last month, the presidential palace said the corporation was looking into Speaker Ferdinand Martin G. Romualdez’s proposal to invest in the National Grid Corp. of the Philippines (NGCP) to help lower energy costs and improve its resilience.

NGCP is the sole and exclusive concession and franchise operator of the country’s power transmission network.

Mr. Consing said Maharlika is finalizing its investment charter, getting its budget approved, and fine-tuning other operational procedures. Once this is complete, it could start investing, he added.

He also said the sovereign wealth fund is working on incorporating “sectoral limits” in its charter or the share of investments per priority area.

“Some investments will come ahead so I think that over three years, we will balance it out at no more than 15% per sectoral exposure,” he said.

Mr. Consing cited the need to distribute capital and allocate it to different sectors that need it. “Because if you don’t put limits to it, then you might become overweight in sub-sectors and therefore leave out others that may actually require attention or capital.”

Maharlika has an initial capital of PHP 125 billion and an authorized capital stock of PHP 500 billion. — Luisa Maria Jacinta C. Jocson