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Samahan ng Nagtataguyod ng Agham at Teknolohiya para sa Sambayanan 132B Matahimik St., Teachers Village, QC · info@agham.org Telefax: 9263139



Samahan ng Nagtataguyod ng Agham at Teknolohiya para sa Sambayanan
132B Matahimik St., Teachers Village, QC · info@agham.org Telefax: 9263139
www.agham.org


Electric Power, Oil and Gas: Lifeblood of industrialization for sale

Introduction

Energy is a necessary factor for industrialization and the Philippines is rich in a variety of fossil and
renewable energy sources. Despite this no significant industrialization activity has taken place in the country.
If we look at the distribution of energy sales (1999), 90.8% of the total energy sales go to households and
small businesses (residential and commercial) while only 8.2% is coming from sales to industries.

This implies two things: that the country lacks industries to utilize the production of energy and it is
the consumer of electric power (mostly households and commercial buildings) that are most
affected by rate increases. The privatization of Napocor through the Electric Power Industry Reform
Act of 2001 or the Power Act therefore has direct implications on the people's daily routine (since
electricity is a basic utility) and has long term strategic implications on our national development.

Electric power is a basic service that is needed by households in everyday activities and is equally important
for industries to operate. The failure of the government to provide electric power was evident when the
country faced massive blackouts in the late 1980s and early 1990s due to a shortage of power supply.

The response of the government to this power crisis was not to build the necessary infrastructure to meet
the demand but to contract out power generation to independent power producers or IPPs. Furthermore, it
has made steps to privatize the whole power industry effectively abandoning its role in providing electric
power services and opening up the power industry to private companies.

The Philippines is rich in its natural resources even in its new and renewable energy. We have enough
resources and alternative sources of energy to sustain the needs for pubic utility services. But even though
our country has potential and rich in energy resources the government fully opens the opportunity to foreign
and private investors to build, develop and operate our energy resources and the whole industry, in which
the only aim is to gain more profit and get incentives from the government like tax holidays, incentives in
exporting materials for their use and many more.
Thus, our energy industry program is under the framework of privatization and globalization. This means that
our government will fully open to the foreign and big local investors the control to explore, develop, exploit
and plunder our natural resources including the NREs, natural gas and oil for the sake of getting more profit,
that would result to the ever worsening poverty situation of Filipino people.
EPIRA is a mechanism that would push to our energy industry into privatization. This policy gives those
foreign and individual investors the power to control the NRE through the Independent Power Prodicers
(IPP,s) and Small Power Utility Group (SPUG) of NAPOCOR. It also includes the P177 Billion potential
investment in renewable energy for 2004 to 2013 and the 60% of P295 Billion renewable investment. The
Shell Petroleum Exploration of Malampaya is one example selling our national patrimony. These was being
controlled by Shell at 45% and Chevron Texaco at 45% and the remaining 1O% that the government wants
to sell in KEPCO that are all foreign corporation.
Energy sources of the Philippines

The Energy Information Administration of the Department of Energy of the US has enumerated the
following main sources of energy in the Philippines: geothermal, hydropower, coal, oil, and natural
gas. All of these contribute to the countrys energy production, which is concentrated in the electricity
sector.

The Philippines is also rich in Renewable Energies. Being an archipelagic country with abundant
agricultural and renewable resources, there exist bright prospects and greater opportunities for NRE
development, utilization and promotion in the country.

Renewable Energy refer to energy sources that can be obtained from continuously recurring energy
processes and cycles in the natural environment including energy sources from waste materials and the technologies that utilize these energy sources.

Example of this energy are the following, energy that come from flowing water (hydropower), the
energy from the heat of the sun (solar energy) , waste material energy (biomass energy),
geothermal energy and energy coming from the wind (wind energy). Aside from these sources, we
have also proven reserves of fossil fuels and indigenous sources such as the coal, natural gas and
oil. (Ex. Malampaya natgas)

Oil production in the country remains flat and far below oil consumption. Oil consumption on the
other hand has been increasing since 1986 up to the present. Despite small proven oil reserves,
companies, like Australia-based Nido Petroleum (formerly Sydney Oil Company Drilling and
Exploration), that are into oil explorations in the northwest and southwest Palawan Basin, the
Cagayan Basin, and other small concessions elsewhere in the country believes that significant
quantities of oil may be recoverable.

The Philippines has 2.8 trillion cubic feet of proven natural gas reserves. In the largest natural gas
development project in the country and one of the largest-ever foreign investments in the country,
Shell Philippines Exploration (operator, with a 45% stake), Texaco (45%), and the Philippine
National Oil Company (PNOC, 10%) has tapped the Malampaya natural gas fields estimated 2.5
trillion-cubic-feet reserves. Gas from Malampaya will fire three power plants with a combined 2,700-
MW capacity for the next twenty years, and could replace as much as 50% of the oil that the
Philippines currently imports for power generation.

Coal is the Philippines largest source of fossil energy production but 82% (1998) of total coal
consumption is imported.

Geothermal power accounts for the countrys largest share of indigenous energy production,
followed by hydropower, coal, and oil and gas. The Philippines is the worlds second largest
producer of geothermal power, after the United States. The country is located in the volcanically
active Ring of Fire. As of April 2000, Geothermal power makes up around 17% of the Philippines
installed generation capacity, most of which has been developed by the Philippine National Oil
Company-Energy Development Corporation (PNOC-EDC).

The Philippines does have significant amounts of hydroelectric potential. The most notable
development, the Agus units, has been built at the Maria Cristina Falls on northern Mindanao, which
makes for 32% of the countrys total hydroelectric power as of December 1999. Hydroelectric power
on Luzon accounts for the largest share to the total hydroelectric power generation (1,280 MW,
56%).

According to EIA, electricity demand is expected to grow almost 9% per year until 2009,
necessitating almost 10,000 MW of new installed electric capacity. As of 1999, the total electric
power generation is 12,050 MW. The National Power Corporation (Napocor) provides a total of
5,400 MW (45%) of electricity while various independent power producers (IPPs) provide the
remaining 6,650 MW.

Southern Energy, a wholly owned subsidiary of Consolidated Electric Power Asia Ltd. (CEPA) of
Great Britain, is the Philippines largest IPP and operates five power plants in the country.
Southerns new coal-fired Sual plant began commercial operation in late 1999. The 1,218-MW plant
is about 130 miles north of Manila and reportedly is the nations largest electricity producer. Napocor
is the sole purchaser of Sual electricity.

Texas-based El Paso Energy International and Hawaiian Electric Industries in February 2000 formed
a 50-50 joint venture to own and operate five power plants now owned by East Asia Power
Resources Corporation, a public Philippine company. The total generation capacity of the ventures
holdings will be 390 MW. The plants are located in Manila and Cebu.

Actually, there is an oversupply of power generated by the Napocor power plants and those of the
IPPs combined. Honoring its Power Purchase Agreements (PPAs) with the IPPs, the NPC had to
retire the operations of its power generating plants to accommodate the higher priced power
generated by the IPPs. The current deman