10 foreign firms keen on $2.1B PH energy plan

By Neil Jerome Morales, The Philippine Star

Posted at Apr 16 2012 07:08 AM | Updated as of Apr 16 2012 10:28 PM

MANILA, Philippines - At least 10 foreign firms have expressed interest in the second phase of the government’s $2.1-billion natural gas pipeline project, the Department of Energy (DOE) said yesterday.

Energy Undersecretary Jose Layug Jr. said investors are awaiting the bidding for the construction of a receiving terminal for natural gas and gas supply to the market.

These companies include ENI S.p.A. of Italy, Mitsubishi Corp. of Japan, AXI LNG Gas of Canada and Mitsui Co. Ltd. of Japan, Layug said.

The DOE is planning to build a gas pipeline from Batangas all the way to Subic in Zambales. It will also include an integrated Bataan liquefied natural gas (LNG) terminal and several LNG-fired power plants.

Phase 1 involves the construction of a $200-million Batangas-Manila gas pipeline, which will be owned and operated by the state-owned Philippine National Oil Co.-Pipeline Corp.

The participation of the private sector will start in Phase 2.

“Private firms will build the receiving terminal, whether floating storage receiving unit or onshore terminal and then they will offer the supply to the market,” Layug said.

The LNG receiving terminal will handle imported LNG that will be distributed to industrial consumers through the pipeline.

Layug said LNG suppliers should negotiate with industrial consumers and power plant owners who are interested to buy LNG.

The last phase of the master plan involves putting up power plants running on gas, which would serve as the anchor load for the pipeline.

“We anticipate 600 megawatts of demand from industrial zones,” Layug said.

“Remember, we are talking about a project within the next five to six years, so demand in Luzon would have gone up,” Layug said.

By 2017, output of the Malampaya gas-to-power project in Palawan is expected to decline.

The natural gas field fuels three power plants with a combined capacity of 2,700 MW, equivalent to about 36 percent of Luzon’s power generation requirement.

Noy urged to listen to Mindanao folk

Bayan Muna Rep. Teddy Casiño yesterday urged President Aquino to listen to the people of Mindanao in solving the power shortage in the region and not make the same mistake of privatizing electricity as his predecessors did in the Visayas and Luzon.

Casiño believes that Mindanao does not have to follow the path taken by Visayas and Luzon where electricity rates are the highest in Asia.

“In fact, given that its low cost of power gives Mindanao its competitive edge, jacking up the rates would kill the economy and make the people of Mindanao poorer than they already are,” he added.

According to the lawmaker, the power summit held in Davao City last Friday showed the right way to go about developing the power sector, which is to ensure that state-run power plants provide cheap and abundant renewable energy while regulating the industry to avoid monopoly and abuse of market power.

Casiño said President Aquino should heed the call of the governors of Mindanao who passed a resolution opposing the planned privatization of the Agus and Pulangi hydropower plants.

Sen. Joker Arroyo chided yesterday Aquino and his advisers for saying that the public should simply “bite the bullet” and face the power crisis in Mindanao.

“The two biggest problems now, (are) the problem of China and the problem of power. The solution, you have to pay higher costs. But it does not solve the bigger problem – the power shortage,” Arroyo said.

“Supposing we agree that we will pay higher... can that be a solution?” the senator asked. “There will still be a shortage.”

Arroyo was reacting to the President’s statement that the public should bear the brunt of the power crisis, rather than complain about high power rates in the region.

He said the Electric Power Industry Reform Act (EPIRA) has failed to lessen the power rates and to pay the debts of National Power Corp. (Napocor).

Standing by him

Aquino is standing by Energy Secretary Jose Rene Almendras amid criticisms that the government could not do anything about high oil prices and the power crisis in Mindanao.

“Before I start, can I just pay special mention to Secretary Almendras. You know Secretary Almendras has become the favorite whipping boy of so many people. For instance, some will call him at five in the morning and ask, what are you doing to prevent high oil prices?” Aquino said before he delivered his speech during the Mindanao power summit in Davao City on Friday.

Meanwhile, two Mindanao bishops have expressed dismay over the outcome of the energy summit attended by no less than the President.

Marbel Bishop Dinualdo Gutierrez and Apostolic Vicariate of Jolo Bishop Angelito Lampon criticized Aquino’s statement that Mindanao residents must pay higher electricity rates if they want stable supply of power.

Gutierrez said it is not fair to pass the burden of higher electricity rates to Mindanao residents.

“It is not the fault of the residents if the region is experiencing power crisis. The government should be the one blamed for the power shortage due to its negligence and wrong policy favoring the businessmen and not the residents,” he said.

For his part, Lampon said Aquino’s statement only showed the government’s lack of insight into the ongoing power crisis in Mindanao.

“Now we are forced to accept the reality to pay more. But that also shows the neglect and lack of insight on the part of the government. That is not the solution to the problem, it creates more problems (for) the people,” Lampon said.

The bishop said the goal of the power summit was not achieved but has created a new problem for the people of Mindanao.

Gutierrez and Lampon opposed the development of a nuclear power plant and biomass in the region to address the power crisis.