While the entire Philippines is on edge to contain the spread of Covid-19, there are other equally pressing concerns that could derail the country’s efforts to rise from economic stagnation.
One of these problems is the possible lack of power to support economic development. One doesn’t need to be an expert to understand that electricity powers industries which in turn stimulate growth in every sector of the economy that will contribute much-needed cash to the national coffers.
I dread the repeat of the day in the early ’90s when the whole country literally and figuratively sweated from rotating brownouts caused by the shortsightedness of government agencies tasked to ensure stable power supply.
Now comes Energy Secretary Alfonso Cusi warning us that we may not have sufficient electricity requirements in the near future. Experts predict that reserves from the Malampaya gas field will only last up to 2027. Others believe that the scenario could happen much earlier than expected. While reserves from the Malampaya gas field will last until 2027, they won’t be enough to fuel future energy requirements.
Cusi said that Malampaya lacks the gas supply that is crucial in providing future natural gas requirements “particularly with the plan to expand application of LNG [liquefied natural gas] in the industrial, commercial, residential, and transport sectors.”
In the recent 9th Liquefied Natural Gas Producer Consumer Conference, he announced that the Department of Energy (DOE) “is aggressively pushing for LNG investments to ensure the country’s energy security [given the] expected depletion of the Malampaya Gas field in the next few years, as well as realize its aspiration of making the Philippines an LNG hub in Southeast Asia.”
Cusi pointed out “the recent urgent need to attract more investments in the downstream LNG industry in the country.” The DOE has issued a notice to proceed (NTP) to two new LNG terminal project players, US-based Excelerate Energy LP., and Batangas Clean Energy Inc. First Gen Corp.
But one of the early foreign companies to venture in the field, Australia-based Energy World Corporation’s (EWC) LNG Pagbilao project is 99 percent complete and its operations until now have been stymied by government red tape. Efforts to piggy-back on existing transmission lines had faced a formidable roadblock, and the government has been unwilling to lend a hand to EWC, which has already invested millions in the project and created thousands of direct employment, with many more benefitting, considering its multiplier effects. In fact, the LNG Pagbilao Project is “locked and loaded” to provide sufficient energy, if only the government allows it to temporarily connect its facilities to existing grids while it builds its own.
Despite lulls in construction because of the pandemic, EWC continues to build its own grid, according to former Quezon governor Eduardo Rodriguez. “Work continues, and the company is close to solving the right-of-way problems which earlier beset its construction works,” Rodriguez said.
What is mind-boggling is how the government can wave an SOS flag to new LNG investors to come in, even as it drags its feet on giving the go-signal to the LNG Pagbilao Project that is already prepared, ready and able to provide power to the country.
Cusi himself acknowledged that LNG remains the best option to ensure the country’s future energy requirements will be sufficiently met. Consider these: Luzon would initially require 3.5 metric tons yearly of LNG to fully cover its existing 3,200 megawatts of gas-fired power plants. Malampaya’s $4.5-billion deep water gas-to-power project in offshore Palawan fuels more than 30 percent of the Luzon grid’s energy requirements.
Even Sen. Sherwin Gatchalian, chairman of the Senate committee on energy, is deeply worried over the impending exhaustion of the Malampaya natural gas, recognizing that it is the second-biggest source of electric power in Luzon.
“We’re racing against time. If we fail to act now, we could be experiencing anew a debilitating rotational brownout by 2024 once our power supply from the Malampaya gas field is depleted,” Gatchalian said. He noted that the absence of additional fuel supplies would jeopardize energy security and might lead to possible rotational brownouts.
Gatchalian filed Senate Bill 1819 to provide a national energy policy and framework for the development and regulation of the Philippine midstream natural gas industry.
Citing how insufficient power debilitated the country in the 1990s, he said that LNG terminal projects should be in place before the anticipated depletion of gas from Malampaya by 2024.
“We’re racing against time. If we fail to act now, we could be experiencing anew a debilitating rotational brownout by 2024 once our power supply from the Malampaya gas field is depleted.”
Sen. Sherwin Gatchalian
“The proposed Midstream Natural Gas Industry Development Act,” Gatchalian reported, “will encourage private capital and foster an open and fair competitive market, while at the same time [ensuring] safe, reliable and environmentally responsible operation of LNG terminals.” He added that the proposed legal framework for the midstream natural gas industry would likewise ensure consumer protection as it would mandate a transparent and competitive pricing of services.
EWC’s LNG Hub Terminal is the first of its kind in the Philippines. It can process 3 million tons of LNG per annum, which is sufficient to generate up to 3,000 MW of gas-fired power plants. Its second tank, which is currently being constructed, can supply up to 6,000 MW of power. The project costs over $750 million of direct investment in the Philippines, and has created over 800 direct jobs during the construction period. The project signifies that the country will now be able to gain access to clean and affordable fuel for power generation, and further develop its gas infrastructure. EWC can commission the first 200-MW unit of its gas-fired power station in six months after the drawdown of funds from the company’s policy bank lenders—the Development Bank of the Philippines, LandBank of the Philippines and Asia United Bank—with 400 MW and 650 MW at three-month intervals thereafter.
Despite this dire energy scenario painted by both Cusi and Gatchalian, why is it that EWC’s LNG project is still getting the cold-shoulder treatment from the government? What gives?
For comments and suggestions, e-mail me at mvala.v@gmail.com