Batangas-Mla gas pipeline project still open to interested parties, says DOE

The Department of Energy (DOE) said all interested parties are still encouraged to apply for a permit to build the $100-million Batangas-Manila (BatMan I) gas pipeline.

DOE Undersecretary Emmanuel De Dios made this statement after First Gas Power Corp. (FGPC) questioned the DOE’s issuance of permit to the state-owned PNOC-Exploration Corp. (EC) without the necessary environmental clearances.

FGPC senior vice president Richard Tantoco earlier claimed that the DOE permit should come after a company has secured an environmental impact assessment (EIA) from the Department of Environment and Natural Resources (DENR).

"We are not aware that there is such a requirement. But we will check on that," de Dios said.

EC spokesman Rudolf Dimen, on the hand, said securing an environment clearance is a non-issue. "The application for environmental clearance will come before the actual construction. EC is not exempted from securing that requirement. It is part of the condition of the DOE before construction. Besides the permit issued by the DOE to EC does not ban any company from applying for a similar permit," Dimen said.

FGPC operates two gas-fired power plants in Batangas- Sta. Rita and San Lorenzo-which in turn sell power to Manila Electric Co. (Meralco). EC, on the other hand, is a member of the $4.5 billion Malampaya deep water gas-to-power project which supplies natural gas to FGPC.

Both EC and FGPC have expressed in the interest construction of the $100 million, 80-kilometer gas pipeline BatMan I, traversing from Batangas to Manila. The firms, so far, have not shown any interest in building the other two proposed gas pipelines – Bataan to Manila (BatMan II or Robin); and Batangas to Cavite (BatCave).

"We are just an entity that issues the permit. As long as First Gas can finance it and comply with the requirement, we can also issue them a permit," the energy official said.

De Dios, however, did not clarify if the DOE will have the final on decision who will finally be given authority to build BatMan I.

"They can form a consortium. It is not practical to put up two pipelines in one route. It is like putting up two power plants in the same area. But I think the market will determine that (who will build the gas pipeline) eventually" De Dios said.

"It will be a question of who will offer the best deal. It is a developmental project. The one who will give the best deal to immediate beneficiaries or those that will be directly affected by the construction of the gas pipeline will eventually prevail," EC’s Dimen said.

According to De Dios, there are a lot of other companies expressing interest to bid for the construction of the gas pipeline. "Not only EC, there are a number of firms signifying their interest for BatMan I," he said.

Tantoco said FGPC will seek a couple of strategic partners that would be willing to share with the company a 60 percent loan and 40 percent equity partnership scheme for the gas pipeline project.

Tantoco said the company is currently in the process of seeking an EIA with the DENR.

After the environmental approval, FGPC will then seek a permit from the DOE. FGPC has been studying this project for about four years, being the first power firm to get a franchise to build a gas pipeline. FGPC owns and operates two gas-fired power plants – Sta. Rita and San Lorenzo – in Batangas.

Aside from EC and FGPC, several foreign have earlier expressed interest to construct and operate the proposed gas pipeline. These firms are Japan Gas Corp., Korean Gas Corp., Petroliam Nasional Berhad (Petronas) of Malaysia, British Petroleum Plc. and Korean Electric Power Co. (Kepco), Mashhor of Brunei, Chevron Texaco and Shell Philippines Exploration B.V.