PNOC urged to offer pipeline up for bids

Energy Secretary Carlos Jericho Petilla has directed state-run Philippine National Oil Co. to start the bidding process for the first phase of the $2.1-billion Batangas-Manila (BatMan 1) natural gas pipeline project, deemed critical to boosting the Philippines’ natural gas industry.

Lisa Go, head for investment promotions of the Department of Energy, said Thursday, however, that the details of the bidding process were still being threshed out.

On the sidelines of a forum hosted by the Economic Journalists Association of the Philippines, Go said PNOC, through its subsidiary PNOC Exploration Corp., must bid out the first phase of the project—which is the construction of the pipeline—by next year.

“The mechanics on how to bid out the project are still being threshed out by PNOC-EC because as the holder of the franchise for the gas pipeline, they will be responsible for the auction,” Go said.

Go added that PNOC-EC had received offers for the construction of the pipeline, as well as for possible joint venture for the potentially lucrative project.

PNOC-EC, however, will likely retain a majority stake in the project in case it does decide to take in an equity partner.

“It will be like a PPP [public-private partnership] project,” she added.

According to Go, the government is still undecided on whether it will create a separate subsidiary to be called PNOC Pipeline Corp. (PNOC-PC) to handle the operations of the natural gas pipeline.

“That’s still being worked out, if there really is a need to come up with a new subsidiary,” Go said.

Based on previous plans, the PNOC-PC was expected to bid out the engineering, procurement and construction contract, as well as the technical and maintenance agreement in 2013.

It will take about three years to finish the construction.

The BatMan 1 project, which is expected to boost the use of natural gas for power generation and transportation, is targeted to be implemented in three phases.

Phase I, which will likely be undertaken by the government, will involve the construction of the 100-kilometer pipeline, while the second and third phases will involve the construction of the receiving terminal and power plant, respectively.

The government is bent on pursuing the massive use of alternative fuels such as natural gas given global oil price volatility, to which the Philippines is highly vulnerable as it imports more than 90 percent of its fuel requirements.

Natural gas has been deemed a feasible alternative that will allow the country to diversify its energy and transport fuel sources.