WHERE DO WE GO NOW!!! IN INDONESIA !!

Energy World’s LNG project left out in Cusi’s list

By

ValA. Villanueva

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November 8, 2018

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Energy Secretary Alfonso G. Cusi says he wants the Philippines to become a liquefied natural gas (LNG) hub in Southeast Asia because of its strategic location.

Based on the Philippine Downstream Natural Gas Rules, any corporate entity that is qualified can participate, but only one will be chosen.

Cusi recently said that the Department of Energy (DOE) will award the project to the winning consortium within the month, and announced three serious proponents from among others: the state-run Philippine National Oil Co., China National Offshore Oil Corp. and Tokyo Gas

I don’t know if Cusi is just experiencing a “senior moment” or he deliberately left out the LNG project in Pagbilao, Quezon, of Australian-based Energy World Corp. (EWC), which is now 90-percent complete.

EWC’s Hub Receiving Terminal, a 650-megawatt (MW) combined cycle gas-fired power plant, is set to become a hub of LNG distribution around the country once it becomes fully operational.  The only problem it has—through no fault of its own—is that it has not yet been allowed to tap into a distribution grid.

It defies logic how Cusi could have forgotten that EWC’s project has already been given the green light by the Energy Regulatory Commission to develop a point-to-point transmission facility to connect its 650-MW combined cycle gas plant to the power grid. The government regulatory agency allowed EWC to develop the P694-million transmission facility to connect its power plant to the new Pagbilao Station of the National Grid Corp. of the Philippines. The project has also been screened in several Senate hearings in full view of the public.

Cusi’s action—deliberate or not—could spark negative repercussions among foreign investors. The unwanted delay experienced by EWC’s project has already piqued Australian investors, some of whom have written to BusinessWise to express their disgust at how the government unfairly treats foreign investors in the country. EWC is a publicly listed company in the Australian stock exchange.

Perhaps Cusi should be reminded that the project has already reached an advanced stage of construction for both the LNG Hub Terminal and the Power Station. The LNG Hub Terminal, the first of its kind in the Philippines, can process 3 million tons of LNG per annum, which is sufficient enough to generate up to 3,000 MW of gas-fired power plants, and, with the second tank currently being constructed, 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 represents an investment of over $750 million, of which EWC has already invested approximately $600 million of its own funds, with the balance of $150 million being financed by Philippine banks.

EWC has also provided a full corporate guarantee under the loan facility covering repayment of the loan and interest to lenders on time and in full, even if the project faces unplanned delays.  EWC signed the loan financing for its Power Station in September 2015 with the Development Bank of the Philippines, Land Bank of the Philippines and Asia United Bank. There were 49 condition precedents to satisfy in order for lenders to release loan funds. EWC says it has now satisfied 48 condition precedents, except for the last, which involves EWC tapping transmission to the grid.

This project is for real, while the three companies—from which one will bag the LNG project—are just “serious proponents,” as Cusi himself announced.

The other interested companies are Lloyds Energy, PhilLNG Lte. Ptd., BKB consortium, Cleanway Energy Development Corp.,  First Gen Corp., Tokyo Gas Corp., China National Offshore Oil Corp., Philippine National Oil Co., Vires Energy Corp. and SK E&S Co. Ltd., Transformation Ltd., Carmine Energy PTE Ltd., Atlantic Gulf & Pacific of Manila, Jera Co. Inc., Limay LNG Power Corp., Kepco E&C and Osaka Gas Co. Ltd.

Interestingly, at the start of Cusi’s stint as DOE chief, one of the first things he did was to visit the EWC Pagbilao LNG Hub. How the existence of the project now escapes his memory is beyond me.

Before the country could even protest our poor ranking in the World Bank’s Ease of Doing Business, the government should first look at itself in the mirror.  Consider this: India moved up in ranking from 130 (2017) to 100 (2018). It ranked below us in 2017 (the Philippines was ranked 113 in 2017), but India is now at 100th place, and our country is at 124. That’s a huge drop of seven places for us, while India leapfrogged by 30!

The country couldn’t even stick to its contractual obligations with foreign investors, often changing rules in midstream. Just take a look at the Malampaya tax dispute (that is another story) and the suspicious delay of the EWC Pagbilao LNG Hub. The Philippines keeps on shooting itself in the foot. It has failed to embark on a strong reform agenda to improve business climate, and does not even seem to have a consistent rule book for investors to follow.