Scar- or "Share"-borough shoals?

Herman Tiu Laurel

4/30-5/6/2012

OpinYon

Viewing the Scarborough affair from my lighthouse and watching humongous Chinese ships crisscross puny Philippine civilian vessels, I noted that these goings-on were really tiny insignificant specks in the vastness of the China Sea.

Looking northward, I can see Vietnam and all I see are busy surveyor ships with Vietnamese, Russian, and Indian markings plowing through that part of the waters, pausing very frequently to drop what seems like dipsticks, long measuring tapes, sensors, cameras, and other analytical instruments.

These are two contrasting approaches to the territorial rows of two different countries with China--the Philippines and Vietnam. While one seems to be creating a scar over the surface of the sea, the other is creating an atmosphere of broader cooperation with many countries that even China will eventually have to accept and join.

Vietnam is engaged in the "share-borough" approach, having joint oil exploration pacts with India and Russia, both members of the BRICS (Brazil, Russia, India, China and South Africa) alliance, with whom China would not want to have conflicts with.

The Philippines has so far opted to take a testy route in navigating its spat with China which appears both foolish and stupid to most analysts--though the BS Aquino III administration may believe this is earning patriot points (which I doubt).

The BS Aquino Foreign and Defense secretaries have been openly announcing to media that they are on a trip to Washington toward the end of April to bring up the problem of China's claim to the Scarborough shoals, which smacks to everyone watching as the crybaby running to its big brother. Pitiful, to say the least.

With the approach the BS Aquino government is taking in this dispute over the shoals off the coast of Zambales, the Philippines will be tied to US interests, practically committing our country to tie up on any exploration ventures only with the US and its traditional partners, such a Britain (as in the Malampaya gas-to-power project with Shell and Chevron-Texaco, which gives the Philippines only a 10% share). Is this the template the Philippines will have for all its future oil projects? It doesn't look good at all for the future of the Philippine energy picture and its national economy.

Conversely, the Vietnamese template is ideal: Deal with all countries with the capital and technology to tap underwater sea resources right now! China will not be able to resist for long to join the oil exploration bandwagon, and with its huge dollar reserves it can offer a great deal to beat the others to the punch--but, that is, if the Philippines is talking to it which up to this time it is not.

The Chinese complain through the grapevine that polite offers to talk tikoy or turkey have been met with stone silence from BS Aquino III. Could the reason for the Great Wall of Dedma (patay malisya) be his fear of US displeasure?

At the Diliman Book Club lectures where Filipino China expert Chito Sta. Romana spoke for five hours (aided by 85 Power Point slides), the discussion on the Scarborough shoal issue was the liveliest. The number of Tsinoy tycoons there insisted that they are aware of the overtures China have made to the BS Aquino III government on cooperation with fantastic "you can't refuse" propositions, but Aquino just won't respond. Many are convinced it is his fear of Uncle Tom in the embassy on Roxas Blvd. that stymies him.

The US plan for the Asia-Pacific, as announced by Obama last December when he spoke during a visit to Australia, is to bring US military focus back to the region. That has just begun with the deployment of the first contingent of 2,500 US Marines to be stationed in Darwin, Northern Australia--the base of McArthur during World War II. This time, the US seems to be preempting any possibility or maybe preparing to position first-strike capability. The announced missile defense deployment in the region using the North Korean "threat" as an excuse has similar implications. In all, the Philippines seems to be playing into this game plan.

From the lighthouse we can see many things, and we can issue the warnings. As I said in the Diliman Book Club discussion, the Filipino intelligentsia has the obligation to remind the people to always "Remember to remember" and teach the old truisms, such as "Power corrupts, absolute power corrupts absolutely," which describe the likely consequences of US and NATO drives today to regain absolute power over the world. I added, it is the obligation of the intelligentsia to help promote the multipolar world, which is the only likely guarantee that US-NATO unilateralism can be stopped.

Multipolarism is a fundamental policy the world must maintain today in order to prevent a reversion to the unipolar world of the last two decades, which led the US under Bush and the neocons to dream and implement the so-called Project for a New American Century that created the 9/11 inside job to launch invasions into Iraq, Afghanistan, and now expanding to the rest of the World.

Only multipolarism, with BRICS at the helm, can stop this. China understands this; and that's why the Vietnamese template is the best and most promising direction for PH-Sino relations over the China Sea disputes.

But can we hope for rational, intelligent, courageous, independent, imaginative and truly nationalist and patriotic actions from a leadership that is bred in the tradition of collaborating with the ruling colonial master?

When the lolo is a collaborator of the Japanese; when the father admits to working "with the Americans;" and the mother one was the one who gave away Sabah, a true national patrimony, what can we expect from the present Aquino-Cojuangco on the throne?

Still, hope springs eternal. Perhaps efforts to enlighten them may find the mark at some time, so we can only keep trying.

The day sinks down the horizon and from this lighthouse the darkening skies are quiet and beautiful. There are no dark clouds over Scarborough shoals and the star lights peep out one by one. The sea is clam; there are no scars on the surface… yet.

(Tune in to 1098AM, DWAD, Sulo ng Pilipino/Radyo OpinYon, Monday to Friday, 5 to 6 p.m.; watch Destiny Cable GNN's HTL edition of Talk News TV, Saturdays, 8:15 to 9 p.m., with replay at 11:15 p.m., on "Anti-Large Scale Mining Update: Tampakan;" visit http://newkatipunero.blogspot.com for our articles plus TV and radio archives)

More BSA III/DoE scams

CONSUMERS' DEMAND!
Herman Tiu Laurel

4/30-5/6/2012

Another historic scam is in the making in the Camago-Malampaya Natural Gas Pipeline Project, a.k.a. Service Contract 38, set to expire in 2024. This project of the PNOC-EC (Philippine National Oil Co.-Exploration Corp.), a government corporation, is a venture with Royal Dutch Shell and Chevron-Texaco which anomalously gave the Philippines only a minority 10% share of a most valuable national patrimony of the Filipino people--its fossil fuel reserves. That original sin will be exacerbated by a new plot involving top Department of Energy (DoE) officials and the giant oil companies, swindling the country of $800 million, as well as delaying the full ownership by the Philippine government of the Camago-Malampaya project and all its benefits. The plotters intend to do this by a 15-year extension of Service Contract 38, 13 years before the present contract ends and a $1-billion capital expenditure for an expansion of gas wells that is totally unnecessary.

Don't Extend? Cut Malampaya contract
It's easier to explain why a 15-year extension of a very profitable 25-year contract that still has 13 years to go is suspiciously premature, especially when at the end of the present term of the contract, the facilities and profits to be transferred to government would be worth hundreds of billions of dollars. It is even easier to explain why this 15-year extension should not be allowed and what a great loss it would be to a nation that is already suffering from extremely high fuel and power prices today and more so in the foreseeable future. If Camago-Malampaya is already in government hands, the people can expect changes in the pricing of the gas-to-power deal, such as the elimination of the indexation of the price of gas to the price of oil, resulting in a lowering of the price of power from gas-fired power plants Sta. Rita, San Lorenzo, and Ilijan that were sold to Meralco. This would at least mitigate the power price gouging abuses made possible by the EPIRA (Electric Power Industry Reform Act), the ERC (Energy Regulatory Commission), and power companies like Meralco. Actually, we should cut the Service Contract (SC) short of the 25 years.

Meanwhile, explaining to the layman the $1-billion capital expenditure proposed by the Camago-Malampaya consortium for expansion of wells, a proposal emanating from the majority owners, Shell and Chevron-Texaco, and subject to conformity of the DoE (hence the need for DoE officials as conspirators), is much more complicated. Nonetheless, the exposé document from DoE and PNOC employees provides the clear explanation: "It will be recalled that SC 38 consortium drilled some 11 wells and in the service contract area, of which only 1 well was found dry. Of the 10 wells, only 5 wells are commissioned to supply the natural gas requirement of the three natural gas power plants… The rest of the wells have not yet been commissioned. But should there be a drop in the supply… the rest of the wells can easily be commissioned by the SC 38 consortium without spending $1 billion as previously announced… The Camago and Malampaya gas reserve is estimated at approximately 4.2 trillion cubic feet of gas. As of… September 2011 only 1 trillion cubic feet has been spent."

As no new wells need to be drilled, the commissioning of the untapped five wells would be the correct course, since opening one well would cost only a maximum of $100 million, a figure that Shell Philippines country chairman Edgar Chua himself confirms. We echo then the DoE and PNOC concerned employees' question, "Why did the DoE and the PNOC allow this $1 billion unnecessary, premature project when the gas reserve would still be good to sustain the project for the next 10 to 15 years?"

The inescapable conclusion is that the SC 38 consortium is inflating the expenditures to $1 billion in order to avail of the cost recovery privileges (contained in Terms and Conditions, Annex III). At the same time, the alleged need to raise said amount is being used as a justification for the 15-year extension to obtain funds from other investors--all while that $1 billion will actually be reimbursed by government, deducted from 60% share of government's profit. Neat, huh? Except that there are alert DoE and PNOC employees who spotted the scam.

Shell DPAs?
How did the plotters ever think they could get away with the scam? As the saying goes, "Some are smarter than others." At least, that's what they thought. Now we have to bring up the usual suspects: the DoE officials at the helm of such activities.

The paper sent to us reports that Energy Secretary Jose Almendras and Undersecretary Jose Layug are both formerly involved with Shell, either as legal counsel-retainers and/or employees. In the case of Layug, an established case of conflict-of-interest has been shown in public statements he made when he was responsible for the Malampaya gas contract during his stint with Chevron. The big problem today is, after these exposés and alerts being issued by various quarters, we have discovered that there has been a "ceremonial signing" of the $1-billion "investment contract," followed by the DoE chief's dispatching his undersecretary, reportedly using his personal passport, to Singapore to meet with "suppliers."

Thus, the concerned DoE and PNOC employees conclude: "The biggest plunder and scam is now being committed, perpetrated, sanctioned, supported and whitewashed by no less than the DoE Secretary Jose Rene Almendras, Undersecretary Jose M. Layug, Jr., and PNOC President Antonio M. Cailao together with Shell as co-conspirator to defraud the government of the Republic of the Philippines of $800 million or P34 billion."

Bigger than that, however, are the hundreds of billions of dollars in oil and gas production facilities and profits that the conspiracy will deprive future generations of Filipinos. These conspirators must not only be exposed and investigated, they must be prosecuted.

Ultimately, the buck of gas and oil stops at the Office of the President. And unless BS Aquino III takes aggressive and immediate action to stop these DoE scams, the nation should make him pay for it come 2013.

A bad lie again
In the meantime, the scams in the power sector continue too. Last week's newspapers reported that "Gov't releases funds to cut power rates," quoting Budget Secretary Butch Abad's claim that, through his office, the Aquino administration released P767.2 million to be "used to help cut energy costs and bring down the high electricity rates in several regions," making it appear that the BS Aquino III government has a heart for the suffering power consumers. But taking a detailed look of the fund Abad cites, we'll find the sham that power industry analyst and consumer advocate Butch Junia discovered and texted us: "Budget Secretary Butch Abad misleads the public. This is not subsidy. This is the host community tax where the LGU share is set and allocated by law. And what is the real story here? Only host communities (where there are generating plants) will benefit--but rightly so. That tax will be tacked on to generation cost which all will pay, making us (the paying consumers) the subsidizers, like in the lifeline rate and the senior citizens' discount. The same modus all over always."

More "lintik" on power consumers
Our OpinYon readers have come to expect a weekly update on the power issue from this column, and we will not fail you. Two Saturdays ago, we had Mindanao anti-EPIRA power crusader Luis "Louie" Corral as guest, with anti-oil cartel crusader Dr. Amanda Cruz, on our GNN show. Louie warned of "electric storms" and power hikes to come. Here's the gist which we wrote in our Tribune column last week:

"Additional rate increases from PSALM (Power Sector Assets and Liabilities Management Corp.)'s P1 trillion stranded costs… an additional P0.39 per kilowatt-hour (kWh) on the 'Universal Charge'; (the National Power Corp. or Napocor's Small Power Utility Group's) budget shortfall of P7 billion just for 2011… an additional P0.07/kWh… (also for) the 'Universal Charge;' an additional SPUG budget shortfall of P3.1 billion (going to) the ERC's Incremental Currency Exchange Rate Adjustment (ICERA) and Generation Rate Adjustment Mechanism (GRAM)… will increase power rates for off-grid areas; the Napocor-Meralco P14-billion Court of Appeals settlement (may be passed on) to consumers;

"Pending ERC petitions of Meralco, Davao Light and Power, Visayas Electric, and other distribution utilities (including 119 electric coops), renewal of transition supply contracts of distributors… and privatized Gencos (which under EPIRA are not utilities) that allow over 12% ROI (will zoom prices anew); new IPP-Administrator contracts will bring up Genco generation charges; Renewable Energy program feed-in tariff would tie the country to immature, expensive power, entailing an additional P0.1256/kWh.; SC Case on illegal dismissal of Napocor workers (will entail) backwages of P48 billion; EVERY ONE (1) CENTAVO PER kWh INCREASE REPRESENTS P657,000,000 PER ANNUM…"

Given all these, EPIRA must go!

(Tune in to 1098AM, DWAD, Sulo ng Pilipino/Radyo OpinYon, Monday to Friday, 5 to 6 p.m.; watch Destiny Cable GNN's HTL edition of Talk News TV, Saturdays, 8:15 to 9 p.m., with replay at 11:15 p.m., on "Anti-Large Scale Mining Update: Tampakan;" visit http://newkatipunero.blogspot.com for our articles plus TV and radio archives)