A ‘secret’ supply of cheap concrete - GOTCHA by Jarius Bondoc

Shh, not so loud, the neighbor-countries might hear. We’ve got a secret supply of cheap concrete right here in Luzon. It’s enough to pave 40 kilometers of new roads per day – the kind of infrastructure that can pull tourists and investors into Manila instead of Singapore or Shenzen. Or set up 4,000 schools each year to train Filipinos in skills for global economy. Or build 50,000 new homes that can make them live in productive dignity.

Strictly speaking, it’s not really concrete. It’s fly ash, a natural byproduct of Napocor coal-powered electricity plants. When mixed with portland cement, the pozzolanic material not only extends concrete but also makes it sturdier. It’s so durable that US, Canada, Australia and European Union countries require the inclusion of at least 20-percent fly ash in road and housing works. Besides, it makes for environmentally-sound recycling.

Napocor’s four coal plants in Luzon produce about 4,000 metric tons of fly ash per day. Seventy-five percent, or 3,000 mt, meets the American Standard for Testing Materials (ASTM) 618 Class F. That grade of fly ash can replace 35-60 percent of portland cement in concrete, depending on the type and volume of the construction. This amounts to tremendous savings, given that a 40-kilo bag of fly ash costs only P3, compared to P135 per bag of portland.

Feasibility studies show that, using only the 20-percent mix that western authorities require, RP can save P220,000 per kilometer of concrete road with the standard 6.7-meter width and .25-meter thickness. And that’s only for new roads. Fly ash can also be mixed with portland for repair and maintenance.

There’s a problem, though. Napocor can’t sell fly ash to just any agency like, say, the public works department or the irrigation authority. Under a contract signed by then-Napocor president Pablo Malixi in 1989, Napocor must sell only to Pozzolanic Philippines Inc., a company 94-percent owned by Australians. The exclusive deal is for 25 years each for the coal plants in Calaca, Batangas; Mauban, Quezon; Sual, Pangasinan; and Masinloc, Zambales – or until 2014.

The lock-in is complete. The contract states that Napocor must sell to PPI the fly ash even of coal plants that there will still in the pipeline in 1989. At that time, only the Calaca plant was viable. Yet the contract would include plants still being built in Pagbilao, Quezon and in Pangasinan. the 25-year countdown would commence on the day the plants start operating.

Here’s the punch. PPI buys the Napocor fly ash for only P80 per mt. Yet it sells the pozzolanic mixture to construction firms for P1,100 per mt. DM Consunji Inc., RP’s biggest construction company, is one of PPI’s many customers. In 1999 alone, it bought 5,500 mt of fly ash from PPI. DMCI mixes 35-50 percent of fly ash with portland in its concrete works. Had it bought fly ash directly from Napocor, DMCI could have quoted lower prices for public works such as bridges, ports, irrigation canals, dams and highways. But PPI’s contract does not allow it to.

At ASTM 618 Class F, PPI needs no further processing of Napocor’s fly ash. Malixi can attest to that, for he now sits as director in PPI’s board. The company’s main expense is to classify, haul and pack the fly ash. Even that is not so big. Napocor engineers themselves segregate the 75-percent 618 Class F fly ash from the lower grades that they dump on surrounding shorelines at huge costs of manpower and on the environment. Hauling is low, too, since PPI’s Australian owners also are big makers-sellers of trucks. Packing is with the usual cheap recycled bags.

The fly ash technology is not new in RP to qualify PPI for pioneer status, low price and 25-year exclusivity. The coal-powered plant in Naga, Cebu, has been selling fly ash for almost 50 years.

Construction firms and potential PPI competitors have complained that at P80 per mt, Napocor should have compelled PPI in its contract to buy all of its fly ash, whether or not the stocks meet the 618 Class F ASTM. Besides, PPI can buy only 350 of the 3,000 mt of fly ash that Napocor’s four Luzon coal plants produce everyday.

In January 2000, Napocor heeded the outcry and sought to open the sale of fly ash, at least from the Masinloc plant, to more bidders. More than 25 firms, including cement makers, signified intention to bid. But Napocor prequalified only eight of them. Napocor then set a floor price of P650 per mt. Since the highest bid was only for P125 per mt, almost double PPI’s usual rate, Napocor declared a failure of bidding. It then ordered Masinloc managers to continue selling fly ash to PPI at the old rate of P80 per mt.

Truly something for the books, says a Napocor manager who notes that the state firm can earn hundreds of millions per day if only the fly ash supply was opened to competition.

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Check this out. As part of Earth Day’s celebration, industrial and commercial recyclers are holding an exhibit up to April 29 at the Glorietta 2, Ayala Center, Makati. Exhibit organizer Philippine Business for the Environment invites restaurant owners, office managers, school administrators, barangay and homeowners association officers to bring samples of their junk for recycling. This includes waste paper, beverage bottles and cans, styro boxes, used car batteries – anything. Exhibitors will prove that recycling really works, along with composting, to reduce home and workplace trash for the good of the environment.

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