Secretary Mario V. Tiaoqui
Department of Energy
1998-2001

ENSURED ENERGY SUPPLY RELIABILITY FOR ECONOMIC GROWTH

The Department pushed for the restructuring of the electric power industry to encourage greater private sector participation. The Energy Industry Reform Act is now pending in the bicameral committees of both houses of Congress.

A total of 3,496 MW were added to the installed capacity with the completion of major power projects such as the 1,000 Sta. Rita FGPC natural gas power plant, 108 Duracom diesel-fired power plant, 600 MW Masinloc coal-fired power project (Units I and II) and the 1,200 MW Sual coal-fired thermal power plant.

Transmission line infrastructures were added to the system to strengthen the systems reliability and dependability. Additional line length projects reached an aggregate of 1,989 circuit kilometers.

ENSURED FAIR AND REASONABLE ENERGY PRICES

• The following short-term measures were adopted to reduce rates:
• About 44 electric cooperatives granted discounted rates benefiting over a million consumers in the rural areas.
• National Power Corporation (NPC) developed several rate reduction schemes to cushion the impact of the economic slowdown that resulted in the dramatic decrease in electricity demand. It also implemented more stringent cost-cutting measures to generate savings to help stabilize power rates.
• Technical support was provided by the National Electrification Administration (NEA) to rural electric cooperatives which enabled these coops to reduce their average loss from 17.3% in 1998 to 15.7% in 2000.
• The Department tightened its watch over the oil industry with daily reviews of international market prices and monitoring of the various operations of local oil companies. Closely monitored were inventories and actual acquisition cost of both crude and product importations. The analyses of these variables/parameters were crucial in determining the reasonableness in the price adjustments of local oil firms.

INCREASED ENERGY SELF-SUFFICIENCY / DECREASED DEPENDENCE ON IMPORTED ENERGY

The country’s energy self-sufficiency level rose from 40.8 percent in 1998, 43.5 percent in 1999 and 45.4 percent in 2000. The upswing production of geothermal energy from 8.9 MMFBOE in 1998 to 19.7 MMBFOE in 2000, together with improved stability of hydropower generation plants contributed greatly to the 2.7 percent improvement in self-sufficiency. Domestic production of energy reached 88.3 MMBFOE generating foreign exchange savings of US$1.8 billion in terms of displaced oil importations.

INCREASED PARTICIPATION OF THE PRIVATE SECTOR IN ENERGY DEVELOPMENT

The Malampaya Deep Water Gas-to-Power Project generated the largest investment in a single infrastructure project in the country to date. Shell Philippines Exploration B. V., together with its joint venture partners Texaco Philippines and Philippine National Oil Company – Exploration Corporation, is responsible for the upstream development with investments totaling US$2 billion. The project is expected to reduce the country’s dependence in oil-based power generation by 30% in 2004 and will generate employment, foreign exchange savings, and substantial revenues to the national government.

Southern Energy Philippines, the largest independent power producer in Asia, poured in US$2.5 billion in investments in its various power projects totaling 2,550 MW in generating capacity.

Almost P13 billion were invested in the downstream oil industry. To date, there are 60 new players in the industry including foreign firms like PTT of Thailand, Liquigaz of Netherlands, Total of France, Petronas of Malaysia, and Coastal of the U.S. Most of the new players are into bulk marketing.

LAID THE GROUNDWORK FOR FURTHER DEVELOPMENT OF THE NATURAL GAS INDUSTRY

With technical assistance from the Asian Development Bank, the Department completed the Gas Sector Policy and Regulatory Project, which recommended a set of regulations governing pipeline construction and operation, gas and transport pricing, as well as technical and safety standards. It also conducted an analysis of the gas market potential and transportation costs, the results of which have indicated the feasibility of developing a transmission network from Batangas to Manila to serve industrial customers and new power plants.

The Department also signedd an implementation agreement with the Japan International Cooperation Agency for the conduct of the Masterplan Study for Natural Gas Utilization in the Philippines. The Study aims to promote the use of natural gas in various areas in the Philippines particularly in the Batangas-Manila-Bataan area, Cebu-Mactan in the Visayas, and Davao and Cagayan de Oro-Iligan corridor in Mindanao.

Funded by a grant from the New Zealand government, PNOC –Exploration Corporation worked on a study which focused on the technical and economic viability of a natural gas transmission and distribution system in southern Luzon.

ACCELERATED RURAL ELECTRIFICATION PROGRAM

Rural electrification, the direct and immediate contribution to the poverty alleviation program of the Estrada administration, is a flagship program of the Department. Dubbed "O Ilaw Program," the program consolidates the regular programs being undertaken by NEA/electric cooperatives, NPC SPUG, DOE and other agencies of the government like the DILG, DAR, DA with a complementary program which seeks to maximize participation of the private sector in rural electrification projects.

The two components under the complementary program are: 1) involving independent power producers or IPPs who will directly participate in electrifying barangays within their respective areas of operation; and 2) the Adopt-a-Barangay scheme where companies, NGOs, private individuals as well as bilateral and multilateral efforts could be harnessed.

ADMINISTERED BENEFITS TO HOST COMMUNITIES

The Department administers a special fund taken from power producers who contribute one centavo per kwh of power produced to give direct benefits to the province, city or municipality that hosts energy resource/energy-generating facilities. It amended certain provisions in the operational guidelines/regulations (ER 1-94) to accelerate rural electrification and address various concerns and issues raised by the recipients of the benefits. For the first two years of the Estrada administration, a total of P473 million was earmarked for the implementation of 607 projects approved. From July 1998 to October 2000, a total amount of P306 million was remitted to the LGUs to reduce cost of electricity and/or energize barangays and public buildings.

IMPLEMENTED COMMUNITY RELATIONS PROJECTS

Socially-responsive Independent Power Producers (IPPs) implemented livelihood projects to enable the communities where they operate to upgrade their quality of life. A few of these projects were : 1) Geothermal Agro-Industrial Demonstration Plant, 2) Manito Geothermal Livelihood Project, and 3) Training programs.

ACCELERATED THE LEADED GAS PHASE OUT IN METRO MANILA

The "Philippine Clean Air Act of 1999" (RA 8749) was enacted to introduce stringent pollution standards and provide the most comprehensive policies on the abatement, prevention and control of air pollution from industrial and transport sectors. A Memorandum of Agreement was signed by the Department with the major and new petroleum players in the phase out of leaded gasoline in Metro Manila. The phase out was nine months ahead of the mandated timetable of the Clean Air Act.

UTILIZED LOW GRADE COAL USING CLEAN COAL TECHNOLOGY

The Coal Briquette Business of PNOC – Coal Corporation, whose mandate is to develop coal as an indigenous energy source, was conceived in support of the government’s resolve to preserve and protect the environment. The coal briquette was originally envisioned to replace fuelwood and charcoal, and therefore, eliminate the need to cut trees.

EXPORTED TECHNOLOGICAL EXPERTISE

PNOC – EDC’s geothermal technology and expertise continued to gain attention both locally and internationally.

IMPLEMENTED THE NATURAL GAS UTILIZATION IN TRANSPORT PROJECT (NGUTP)

The Natural Gas Utilization in Transport Project (NGUTP) is a joint project of the Department, the Department of Science and Technology and PNOC. The first leg of the project was the conversion of an Isuzu Hi-lander AUV model to run from diesel to natural gas. The second leg of the project was the commissioning of the Philippines’ first CNG Station in PNOC’s gas power plant compound in Echague, Isabela.