The country’s’ newly-established sovereign wealth fund is close to finalizing its maiden investment in a power transmission project eyed at addressing chronic electricity shortages on Mindoro island, officials said.

The One Mindoro Power Project, spearheaded by the Maharlika Investment Corporation (MIC), seeks to upgrade the island’s secondary transmission backbone in partnership with the state-run National Electrification Administration (NEA).

“We should aim to close the acquisition of the target in three months and commence expansion thereafter,” MIC Chief Executive Officer Rafael Consing Jr. told reporters in Manila.

The project involves purchasing and modernizing Mindoro’s transmission assets from the National Power Corporation (NPC), which currently lacks funds for necessary upgrades.

Initial estimates place the asset value at around P2 billion pesos, with additional upgrades potentially costing between P1-2 billion pesos.

NEA Administrator Antonio Mariano C. Almeda said the project is expected to improve voltage stability and electricity reliability on Mindoro, an island of 1.4 million.

The investment is the first bet for the Maharlika Investment Fund, which was established in July 2023 with an authorized capital of P500 billion pesos.

The fund, according to Malacañang, will stimulate economic growth through strategic investments in infrastructure and energy projects.

Under the planned timeline, NPC hopes to complete the asset transfer by 2025, with infrastructure upgrades expected to take up to two years.

Once Mindoro is connected to the national power grid, the National Grid Corporation of the Philippines (NGCP) will be required to purchase the assets from MIC.

“There is keen interest in this project,” Consing said at a recent capital markets dialogue hosted by the Philippine Stock Exchange in partnership with the UK Foreign, Commonwealth and Development Office.

The move follows an agreement signed in April 2024 between MIC and the provincial governments of Occidental and Oriental Mindoro to support critical energy infrastructure investments in the island.

Beyond Mindoro, MIC is exploring investments in other infrastructure projects, including the expansion of Clark International Airport and modernization of Poro Point Seaport in partnership with the Bases Conversion and Development Authority.

The establishment of the sovereign wealth fund has drawn both praise and criticism.

Supporters view it as a crucial tool for development, while critics have raised concerns about governance, citing the Malaysian 1MDB scandal as a cautionary tale.

Consing defended the fund’s framework, noting that safeguards against potential abuse were approved in July.

“We are undertaking due diligence on four projects simultaneously,” he said.

The fund’s strategy aligns with President Ferdinand Marcos Jr.’s push to reduce electricity costs in remote areas which was championed by the late President Ferdinand Marcos Sr.

A Department of Energy (DOE) study cited by Consing suggests that increasing electricity access from zero to eight hours daily can boost household income by 15.7 percent.

“The combination of electricity and broadband is one of the recipes for capital formation,” Consing said.

Rather than relying on excess government funds, MIC is financed by contributions from the national government, state-owned banks, and central bank dividends.

The fund expects to announce more concrete details about additional projects next year, including potential investments in sustainable copper mining and possible partnerships with Singapore in data centers and sustainable development.

“When we look back five years from now, we want to be judged by how many jobs we’ve created, sectors we’ve enabled, and lives we’ve changed,” Consing said.