By Lenie Lectura @llectura,
Butch Fernandez & Samuel P. Medenilla
THE National Grid Corp. of the
Philippines (NGCP) said on Monday that only the Energy Regulatory Commission
(ERC) is authorized to conduct an audit on its technical performance as stated
in the concession agreement, amid pressure from the Department of Energy (DOE)
and lawmakers for an audit based on, among others, concerns over foreign
control in daily operations.
“What NGCP cannot accede to is an
audit of the system operations and other facilities as demanded by TransCo
[National Transmission Corp.]. The law and the concession agreement are clear
that such audit may be ordered only by the ERC based on the standards defined
in the Philippine Grid Code,” NGCP President Anthony Almeda said at a Senate
Energy Committee hearing.
Also invited as resource person to
the hearing called by Sen. Sherwin Gatchalian, ERC chief Agnes Devanadera
assured senators that within the first quarter of the year, the ERC can
conclude the procurement for the third party that will conduct the audit and
commence with the review thereafter.
NGCP is 40-percent owned by the
State Grid Corp. of China (SGCC), and this has fanned fears raised in some
quarters that a foreign entity can remotely shut down the Philippines’s power
supply. The NGCP repeatedly disputed this.
“Hindi po totoo ito [That is
not true]. There is no proverbial red button that can instantly turn off the
Grid. Kahit ako po hindi ko maisasara ang Grid nang mag-isa [Even
I cannot shut it down on my own]. There are existing protocols that actually
prevent the unsupervised remote access to the Grid. I am willing to discuss
with the Honorable Committee these protocols, but only in executive session,”
said Almeda.
At the beginning of their
operations, Almeda said the Chinese had advised NGCP on technical matters,
given their experience and expertise. Over the years, the Chinese side passed
on their know-how, and Filipino technical staff have acquired their own
experience and expertise, he added.
“The management and control of
system operations are exercised exclusively by Filipino engineers. Even the
specifications of technical equipment sourced from various suppliers were
designed by Filipino engineers before purchase orders were made. The fact that
a number of these technical equipment were supplied by Chinese entities does
not mean that SGCC now exercises control over system operations,” Almeda
continued.
As such, he pointed out that there
is no need to “take over” system operations from the Chinese and “turn over”
the same to the Filipinos, since the control of the systems operations has
always been and remains to be with NGCP.
At present, Almeda said the only
Chinese nationals within NGCP are the directors who were elected based on
SGCC’s proportionate shareholding in NGCP.
Cybersecurity
Nonetheless, the National Security
Council (NSC) is now calling for stronger “cybersecurity” for the country’s
critical infrastructure, particularly the energy sector, amid concerns it could
be hijacked by foreign powers.
National Security Adviser Hermogenes
C. Esperon Jr. issued the statement after the National Cybersecurity
Inter-Agency Committee (NCIC) completed its preliminary baseline assessment of
the NGCP.
The NCIC includes representatives
from the NSC, Office of the Executive Secretary (OES), Department of
Information and Communications Technology (DICT), Armed Forces of the
Philippines (AFP) and the Professional Regulation Commission (PRC).
“It was suggested that periodic
cyber-security assessments are needed to ensure that our power grids are safe
from foreign manipulation,” Esperon said.
NSC held the review from December
2019 up to last month after some energy officials said at an earlier Senate
hearing that the State Grid Corp. of China, which has a 40-percent stake for
NGCP, could remotely access NGCP’s systems.
Esperon noted they have “taken
seriously” the “allegation that the National Grid can easily be controlled by
foreign entities,” thus they conducted the review.
He said they are now working with
stakeholders “to reinforce the security protocols and guarantee” for the energy
sector.
“With this in mind, and with the
recently conducted assessment, we assure Filipinos that the administration is
taking steps and precautionary measures to guarantee that the National Grid
Corp. of the Philippines, its facilities and infrastructures are protected with
the highest security procedures,” Esperon said.
Audit
pushed
The DOE and TransCo have been
pushing for the conduct of an audit of the transmission grid.
“NGCP must allow DOE and TransCo to
conduct an audit based on the protocols we submitted,” said Energy Secretary
Alfonso Cusi.
However, NGCP officials said there
are certain parameters for different kinds of audit, adding that the only
agency that should conduct an audit is the ERC.
“The Epira [Electric Power Industry
Reform Act] specifies that only the ERC can impose sanctions and penalties. But
TransCo wants to do the performance audit itself—a matter of regulation
reserved only to the ERC…NGCP will trust only the ERC not only because the ERC
was established by law as ‘an independent quasi-judicial regulatory body,’ but
because TransCo has so far been far from independent or fair; but also, it has
demonstrated a desire for power the law rightfully withheld from it,” said
Almeda.
The ERC, for its part, admitted
there was a delay on its part to conduct an audit. “We did not have funds then
and ERC was only granted the necessary funds in the 2020 [budget].
The practice then was NGCP would provide the fund for the audit, [then
they will] award ng contract for the third party and [then they will do
the] review. So, we had to change this,” explained Devanadera to senators.
No
remote access
Meanwhile, Almeda also said that
there is no truth to the insinuation that NGCP allows international remote
access to the Grid through the Intercontinental Submarine Network installed by
Huawei and allegedly linked to the NGCP.
“In the first place, NGCP was not
the one which installed said Intercontinental Submarine Network…the software
and hardware system that controls the national grid, the Scada [or the
Supervisory Control and Data Acquisition]system, is a stand-alone system that
is not connected to the Internet or any network. The Scada is disconnected from
the Virtual Private Network, or VPN, by default, rendering an unsupervised
direct remote access impossible,” said Almeda.
The Senate Energy Committee told
NGCP to allow the DOE and TransCo to inspect the grid operator’s facilities.
The
‘deal’ pitched by Win
“Here’s the ‘deal:’ You allow the
inspection of the facility or else we will proceed reviewing your franchise
because clearly there’s a violation of the Constitution, which is the basis of
your franchise,” said Senate Energy panel chief Gatchalian. “I have a very
simple deal. Talk to your board, to your management because clearly we’ve
established that you violated the Constitution.”
The violation raised by Gatchalian
has something to do with the appointment of two non-Filipino citizens who used
to hold key positions at the NGCP. They are both Chinese.
The Constitution requires the
executive and managing officers of public utilities to be Filipinos.
Monday’s hearing was called for the
committee to verify whether Filipinos are in charge of its day-to-day
management amid national security concerns. The committee also wanted to
scrutinize the compliance of the country’s power transmission line on its
mandate to safeguard the Grid, and ensure continuous supply of electricity in
the country.
Senators
wary
At Monday’s hearing, senators took
turns grilling officials amid concerns the China’s state-owned SGCC could
control the Philippines’s lone power transmission facilities.
NGCP executives, however, insisted,
“We have no problem in security.”
They said, “We do not object to
inspection [of the Grid] but not to jeopardize the power grid,” adding that the
cybersecurity in place had not encountered problems as the facility is checked
everyday for “vulnerability.”
This, after Sen. Richard J. Gordon
questioned the Chinese personnel’s role in the system.
Gordon and other senators questioned
the presence of Chinese nationals in the executive and managerial positions at
the NGCP, wondering why the primary signatories for the Luzon Substation
Expansion Project contract in 2011 were Chinese “and not Filipinos.”
A copy of the contract
presented by Gordon to the Gatchalian committee showed a certain Wen Bo signed
as the technical officer and Zhou Xiaoan as the country manager, while Almeda,
who was then chief administrative officer, signed “only as a witness.”
Gordon then grilled NGCP officials
on the use of the NARI Transmission Control Operational Platform system, a
remote monitoring and control structure located in China, in running the Grid.
Noting that the system enables the
Chinese engineers to troubleshoot, operate and control the NGCP’s power transmission
network, Gordon voiced concern the Grid could be shut down “from China,” a fear
that NGCP officials allayed.
Gordon invoked Article 12
Section 2 of the 1987 Philippine Constitution which, he noted, states
that “all lands of the public domain, natural resources, such as waters, oils,
including all forces of potential energy are owned by the State.”
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