(The Philippine Star) | Updated August 14, 2017 - 12:00am
MANILA, Philippines -
Gregorio Araneta Inc. (GAI), the proponent of a $2 billion LNG facility
in Bataan, is disappointed over the government’s flip-flopping stance on the
project after rejecting the group’s proposal and saying it would instead open
the matter to other interested parties.
In an interview,
company chairman Gregorio Araneta III wondered why Energy Secretary Alfonso
Cusi now wants to solicit proposals from other parties to develop the LNG hub when
Cusi himself last year said he is happy with GAI’s proposal, which is in
partnership with the MVP Group and other foreign investors.
“I’m surprised they are
now saying they have to look for somebody else. We’ve been working on the
project since 2014. We have given P38 million in deposits already and we have
spent substantial amounts on the project,” Araneta told The Star.
This latest twist will
effectively delay the development of LNG in the country at a time when the
Malampaya facility, the gas-to-power project which supplies 40 percent of
Luzon’s power requirements, is already thinning out, several energy officials
from the previous administration, including a former member of the PNOC board
told The Star.
The ambitious Energy
City LNG project, to be located in the Bataan industrial park of
PNOC-Alternative Fuels Corp. (AFC), was submitted for approval as far back as
2012 to supply the power needs of Luzon in time when the Malampaya gas thins
out in 2022.
PNOC had entered into
exclusive negotiations with the GAI-led group and was merely negotiating the
leasing rates for the property.
In a meeting on June
25, 2015, the board of PNOC-AFC, the now defunct subsidiary which owns the
Bataan land, formally approved the lease arrangement proposed by GAI, which was
forwarded to parent firm PNOC for final approval.
But through 2015 to
2016, there was still no final approval of the lease arrangement.
When President Duterte
was elected into office, the group presented the plan anew to Cusi in a meeting
on July 29, 2016 to transition the project into the new administration.
Cusi was very happy to
learn of the proposal for an LNG project that had interested investors from the
private sector such as the MVP Group, Mitsui and Osaka Gas, which are large
corporations with the ability to develop the project without government
funding.
But after the meeting
with Cusi and in stark contrast to earlier discussions, PNOC said the group
must lease all the available lots in the industrial park at commercial rates.
In all, the PNOC now
wants to use the Bataan freeport zone rates, notwithstanding the presence of
informal settlers in the area.
GAI sought more
information on the changes in the lease rates but instead of pursuing the
negotiations, PNOC, now under the leadership of retired admiral Reuben Lista,
rejected the group’s proposal and deemed it “resolved.”
Private sector
The Department of
Energy and PNOC have effectively put GAI’s proposal in the trash bin and are
instead pursuing the development of a similar facility in Batangas instead of
Bataan.
Cusi, who is also
chairman of PNOC, said in a recent interview with reporters, they are opening
the project to other investors.
He said opening the
project to other proponents would enable the government to get “what is really
beneficial for the country.”
“We have two
objectives: One is for our national energy strategy when Malampaya is depleted
we have the feedstock or the fuel to support 3500 MW dependent on Malampaya
gas. Number two, we want to put the Philippines in the LNG hub for Asia to
complement Japan, Singapore. We want to take that opportunity for our country’s
economic development,” Cusi said.
The DOE also wants to
put up the facility in Batangas and not in Bataan.
LNG
LNG is natural gas that
has been converted into liquid for ease of storage or transport.
The government and some
of the country’s energy players have stressed the need to have an LNG facility
in the country, especially with the looming depletion of Malampaya gas.
Many have expressed
interest in joining the LNG bandwagon – the MVP Group, the Lopezes and MRC
Allied, among others.
But long before others
thought of it, GAI has already come up with its studies and proposal to the
government.
Delay
With the government’s
change in stance, however, the development of an LNG hub in the country will
certainly face delays.
Cusi said this is not a
problem.
“It is important that
we do it properly. We will still try to beat the timeline,” he said.
PNOC was initially
targeting to start groundbreaking for the LNG project in Batangas by early next
year and completion within the term of President Duterte.
Batangas versus Bataan
However, industry
sources said for an LNG terminal, the more ideal site would be Bataan.
The primary advantage
of Bataan over Batangas as a site is the Manila Bay, which makes docking safer
especially during the typhoon season as opposed to ports that face open seas.
Proximity to Malaysia
and Indonesia, which are among the sources of LNG, can be the second advantage,
sources said.
Investor concerns
Aside from the delay in
the project, the government’s flip-flopping stance also sends a wrong signal to
investors.
What’s in store for
people who want to start something out? It’s harder even for foreign companies,”
said an energy player.
More importantly,
sources said, it is in contrast with the government’s policy of encouraging the
use of natural gas as embodied in Executive Order 226 or the Investment
Priorities Plan.
No comments:
Post a Comment