Asian Century By Herman Tiu Laurel
The recent visit of Minister Liu Jianchao of the International Department of the Central Committee of the Communist Party of China (IDCPC) has re-affirmed China’s continuing efforts to help the Philippines expand towards national self-sufficiency in energy and infrastructure – all very vital factors in the present and future well-being of the Filipino nation.
Presently, the Philippines should prioritize the basic and desperate need of the country for energy self-sufficiency. On top of the energy projects development program should be the revival and continuation of the PHL-China Reed Bank oil and gas development 60/40 joint venture in favor of the PHL which could yield as much as 5.4 billion barrels of oil and 55.1 trillion cubic feet (tcf) of natural gas.
“It seems that there are some legal barrier or legal factors that are standing in the way of final consensus. I hope that both sides will move about this issue in a way that is feasible, in a way that (is) practical so that the cooperation could be continued, could be realized… without prejudicing each other’s claims, of their own positions so that the cooperation could happen,” Liu said.
We’ll get back to the reasons the desperately needed joint venture has been delayed, involving the interference of foreign oligarchs using lawfare (war using legal instruments) and controlled politicians to obstruct the progress of the desperately needed energy project with a “termination” of the deal which up to this day has not been backed by any documentary evidence.
Powering up the power projects
It is a real shock to read recent headlines declaring shortages of electricity in the Philippines even to this day when the EPIRA (Electric Power Industry Reform Act) which promised to provide cheap and abundant electricity to the country was enacted into law by then president Gloria Macapagal-Arroyo in 2001.
Twenty-two years have passed and we still face shortages!
The reason for the continuing shortfall of power supply is that very few, if any, new power supply entered the scene after the power oligarchs bought up government’s power assets for a song or with any compensation at all. The local power oligarchs just took over the revenues of the profitable government power assets and never re-invested in the industry – laughing all the way to the banks.
Funding additional capital expenditures have been funded mostly to provisional power increases which they fix with an inept Energy Regulatory Commission. The absence of the required review, reset and true-up for at least four regulatory periods of every four years since 2001, according to the late Jojo Borja, has stacked up refundables to consumers to as much as over P200 billion from Meralco and topping 1 trillion pesos for the entire industry, in over-collections.
President Bongbong Marcos, Jr. now has the opportunity to make up for lost time by opting to convert this huge consumer refundables as public equity in the Public-Private Partnership that he has envisioned during the campaign, as a first step to nationalization of the utility.
He can of course catch up and stay ahead of the spiking demand for electricity in the post-pandemic recovery period with China’s massive capacity to finance and build hydro-electric dams that also serve agriculture with irrigation, solar power farms and, as Germany belatedly shows is inevitable and safe, new clean-coal power plants.
Director Liu explained to the Philippine audience, “We are ready to work with the Philippines in energy sectors. We have the largest hydro power generation in the world.” Her also expressed intentions to discuss “coal power plant financing” with the Philippine government. (Later below I will explain the resurgence of “clean coal” after German Green Party’s ideological debacle amidst the Ukraine war.)
Oil-Gas Joint Venture obstructionists
The Philippines could have already had some production of oil and gas at the Reed Bank by this time if the obstructionist, and I dare say – saboteurs, were not there maliciously throwing legalistic monkey wrenches into the joint venture talks, and invoking provisions of the constitution in a twisted manner.
Article XII, Section 1 of the Philippine Constitution says “the goals of the national economy are a more equitable distribution of opportunities, incomes, and wealth, a sustained increase in the amount of goods and service produced by the nation for the benefit of the people…”
It is clearly deceitful and hypocritical for the lawyers and mouthpieces of the local dummy power oligarchs to protest and obstruct the PHL-China joint venture because the Reed Bank joint venture gives the Philippines 60% of proceeds.
On the other hand, the Malampaya project with British, Dutch and American interests sharing only 10% for the Philippine government but giving 90% of its revenues to two foreign companies, was approved.
Chief apologist for the obstructionist former Justice Antonio Carpio has argued that, China “sought to delete two crucial portions in the Service Contract System which states that the oil and gas belong to the Philippines and that Philippine law will govern the contract”.
If we hardline on Carpio’s ridiculous position, we risk getting zero.
Continuing to dupe the public, the former associate justice of the Supreme Court even invokes a supposed “arbitral win” over China that UN Spokesman Stefan Dujarric said in 2016 the world body has nothing to do with.
The brains behind all the obstructionism if a foreign group led behind the scenes by the Salim group represented in the Philippines by Manny Pangilinan’s PXP Energy Corporation who revealed his hand in 2014 offering the Reed Bank project to China’s CNOOC, and jumped in to start drilling in June 2022 after Locsin announced termination of the joint venture without providing any documentary basis to this day.
Practical advice from Jianchao
The facts: Reed Bank is a disputed area, where China’s position is one of ownership, therefore sovereignty, while ours is on the basis of it being in our “exclusive” economic zone, therefore only sovereign rights that cannot protrude into sovereign territorial waters.
The arbitral ruling cited by Carpio is not recognized by the UN and China, and even if arguendo it were, the basis of that ruling is the UN Convention on the Laws of the Seas which has no jurisdiction over sovereignty issues.
China has many other sources of oil and gas while the Philippines does not. It can arbitrarily tap the Reed Bank resources without our consent but prefers a joint venture with the Philippines for a neighborly bilateral solution..
The Diplomat said “Considering the risks and tradeoffs, Beijing may instead choose to engage in a potentially less destabilizing option—presenting Manila with a choice between China’s unilateral exploration of Reed Bank or joint development on China’s terms.”
But why can’t we see this as a compelling proposition when China, despite its preeminent position on the matter, and its capability to enforce its will against any opposition, is in fact offering the Philippines not the equivalent inferior share but 60% of the take, after spending 100% of all costs of exploration?
Reed Bank, or Recto Reef as we call it, is part of the Kalayaan Island Group quadrant as a regime of islands, we began claiming in 1978 beyond our 12 nautical miles of territorial seas. China has never objected violently to our delimitation, what are we to harvest showing any legalistic recalcitrance?
PBBM can truly break the deadlock and the reign of the obstructionists and saboteurs, and start giving hope and comfort to the nation by exercising, as suggested by Jianchao for both sides to “demonstrate some kind of flexibility… without prejudicing each other’s claims, of their own positions so that the cooperation could happen…”
Anti-Coal lobby is anti-Development
I never swallowed the “Man-made global warming theory” of Al Gore, the theory that carbon emissions is the main cause of climate change. Too many other natural factors weigh -in that have has been happening through the eons, from solar activity variations to changes in the earth’s orbit and rotation, but anti-carbon emissions campaigns are indeed good anti-pollution measures.
For some time when coal-fired power plants were still emitting uncontrollable thick black emissions the ban on coal was justified, but as man and science innovated, clean coal was introduced. But the anti-coal movement persisted because it was a perfect camouflage for US anti-development, anti-developing countries who would be persuaded to opt for more expensive energy.
The US also uses it as a geopolitical tool even against “allies” that would be potential rivals such a former enemy Germany, Europe’s power house economy. The US set up the German Green Party, made to win parliamentary power to ban coal and nuke power and go only for expensive RE. In the wake of the Ukraine War’s energy crisis Germany now sees the folly of “only RE power” and returns to coal.
RP: Anti-Clean Coal leader
The Philippines, always the leader in following fashionable US civil society trends, has a very vibrant anti-coal movement. In 2020 the environmentalist magazine Mongabay reported that a “Philippine community goes to court to stop coal plant in ecological haven”, that is Palawan. No group was identified, only five individuals in a photo was shown – likely environmentalist activists.
In 2020 Mongabay reported “Philippines declares no new coal plants –” 2021 the Philippine Daily Inquirer reported “Coal Plants Stoke Community Fears in the Philippines” instilling fear of even clean coal. On August 8, 2022 the Philstar publishes a scare piece, “For recovery’s sake, Philippines rescues ‘dirty’ companies from pandemic hole” about the Palawan coal fired plant project.
In November 2021 China’s Global Times reported that “China launches $ 31.3-billion relending facility for clean coal” to support the clean and efficient use of coal.
Despite the continued use of coal, setting up modern clean-coal or what they call supercritical to ultra-supercritical plants while retiring old “dirty” coal plants, China has been continuously reducing it carbon-emissions which is recognized the world over.
The Dinginin power project is the first modern coal-fired power project in the Philippines. Going for a total of 1.3 GigaWatts, it is located in the Bataan Peninsula. The project comprises two supercritical, pulverised coal-fired units of 668MW capacity each with each block is equipped with flue gas desulphurisation (FGD) system to control emissions.
Its development was supported as part of China’s Belt and Road Initiative.
The Philippines should welcome the offer of China as expressed by Director Jianchao for cooperation, financing and construction of power and energy facilities ranging from massive solar farms and even to “clean-coal” power plants for the direly needed Philippine energy push for the post-pandemic recovery period.