Solon seeks probe on drilling contract

An administration congressman is set to file a resolution for the House to investigate Philippine Geothermal Inc. (PGI) in connection with an allegedly anomalous drilling contract that could result in higher costs for power consumers.

In a statement, Rep. Prospero Pichay (Lakas, Surigao del Sur) said PGI had failed to award the drilling contract for the expansion of its steam fields to PNOC-Energy Development Corp. (PNOC-EDC) despite the state firm’s lowest bid and excellent track record.

"PNOC-EDC had complied with the bidding’s technical specifications and tendered a bid that was P93 million lower than the winning bid by Australian firm Century Drilling," Pichay said.

The lawmaker said the government should likewise go over other PGI contracts to see if there are other anomalies that could increase the steam charges it imposes. PGI is the operator of the Makban, Laguna and Tiwi, Albay geothermal steam fields.

"If PNOC-EDC’s claim is valid, there is no reason why our consumers should shoulder the bigger costs that would be passed on to them in the form of higher power rates. Filipinos are already paying exorbitant power rates and should not be made to carry the burden if excessive gains by greedy multinationals," Pichay said.

Recently, PGI announced preparations to drill three new wells to expand the capacity of its geothermal steam fields. The drilling contract had been awarded to a Filipino company, DESCO.

However, PNOC-EDC claimed the contract was actually awarded to Century Drilling, which submitted a bid of $4.27 million through DESCO.

The state firm’s bid was $3.65 million, or P31 million lower for each well.

Pichay said he wasn’t convinced by PGI’s explanation that it had chosen Century Drilling over PNOC-EDC for safety reasons.

"PNOC-EDC has been drilling for many other firms as well as its own wells in Tiwi and Makban. It has been in the business of geothermal drilling since 1974. It has very fair pricing and a safety track record that shows it has the competence to meet PGI’s requirements," he said.

In 1999, Pichay, as House assistant minority leader, opposed the planned purchase by PGI of the Tiwi and Makban steam fields through a negotiated sale from Napocor.

At that time, the lawmaker cited the closeness of PGI’s local partner Eusebio Tangco to then President Joseph Estrada as the possible reason for what he had condemned as a "sweetheart deal."

Pichay’s opposition led to Napocor’s cancellation of the negotiated sale in favor of a bidded contract.

"I am saddened that, an administration later, PGI has apparently failed to learn from past lessons and conduct operations in a more ethical manner," he said.