The Malampaya deal

LATE last year, the Department of Energy greenlighted the transfer of the operations of the Malampaya gas project to Prime Infrastructure Capital Inc.

As we know, Malampaya is a major source of fuel for big power plants that supply the Luzon grid with adequate electricity supply.

The transfer was a timely development as it recognized the urgent need to keep the gas field running safely while drawing nearer the end of its shelf life. Malampaya has so far generated at least $10 billion in government revenues. But the government deal with a private firm has not been without its critics.

Among them is Eduardo Mañalac, former energy undersecretary and Philippine National Oil Co. president under the Arroyo administration.

So why is he against extending Service Contract 38 governing Malampaya operations?

During his stint as energy undersecretary and PNOC chief, Mañalac managed to contribute to efforts to stabilize the supply of energy in the Philippines. He was involved in negotiations to sell five percent of the government stake in PNOC Exploration Corp. (PNOC-EC), a unit under Mañalac as PNOC chief, to a South Korean company. The deal was not finalized after the National Economic and Development Authority, under then Socioeconomic Planning Secretary Romulo Neri, opposed it and recommended to Arroyo that government keep its stake in PNOC-EC intact. Mañalac gave three reasons why he supported the aborted sale.

First, he said, it was an imposition by the DOE and the Executive Department then headed by Arroyo.

Second, it was a bid to recoup a 100 millionpeso loan spent on acquiring 10 percent stake in the state-owned company. And third, he supported the sale against his will. In other words, Mañalac was saying he was a good soldier. By heeding instructions that he now claims to be opposed to, Mañalac pleased higher authority and kept his job. That he chose to toe the line in this case, belatedly announcing it was against his will, is quite revealing of what he held dear to him.

The second transaction in which Mañalac played a key role was a tripartite deal with China and Vietnam called Joint Marine Seismic Undertaking or JMSU in 2005.

The agreement would have allowed China’s state-owned oil company CNOOC and Vietnam’s PetroVietnam to conduct scientific studies for the presence of oil or gas deposits on a 142,886 square kilometer area in the West Philippine Sea inside the Philippines’ exclusive economic zone (EEZ).

The truth is that Malampaya had been successfully operated by an all-Filipino team of experts for at least two decades and which has been retained by the new consortium and reinforced with more Filipino experts

Mañalac explained the JMSU came at a time of “high dependence on imported petroleum and rising oil prices in 2004.” It was, he said, part of the Arroyo administration’s ambitious five-point plan to achieve energy independence.

But as in the case of the aborted sale of five percent of PNOC-EC to a South Korean company, Mañalac disavowed ownership of the idea to cut the JMSU deal with China and Vietnam.

“It is not my idea. It is the idea of the government as part of its energy independence strategy,” Mañalac said. In other words, again, he was just being a good soldier.

He, however, brokered the JMSU despite the deal not being his “idea.” His signature as PNOC public and private sectors.

Finance Secretary Benjamin Diokno had even warned of a “fiscal collapse” resulting from the MUP pension, which is an “unfunded” liability that is expected to exceed P1 trillion by 2035 from P213 billion in 2023.

The finance chief pointed out the MUP is funded or shouldered fully by the government through borrowings, with no contribution from the pensioners themselves.

Hence, the Finance Department is pushing for a unified separation, retirement and pension system for the MUP that should apply to those in the active service and new entrants, and members across all MUP agencies. The AFP has indicated that it is “amenable and open” to modifications in the pension system so long as these are fair and equitable.

But Department of National Defense (DND) Officer-in-charge Senior Undersecretary Carlito Galvez has said while the DND and AFP recognize the financial implications and fully support measures to address the current MUP pension system issues, lawmakers should also consider the morale and welfare of the soldiers. Galvez lamented the discussion of proposals relating to retirement benefits, most especially the imposition of a pensionable age, has “already affected the morale and caused uneasiness not only from within the active ranks of the AFP, but even from our veterans and retirees.” So how will this issue be resolved? At this point, there’s no clear-cut solution but the two sides will have to find common ground sooner or later.

ACCORDING to the February 2023 report on internet usage in the Philippines published by Statista, improvements in internet infrastructure is driving the growth of internet users and considered as among the highest in the region.

The report said as of November 2022, “the average download speed of fixed internet in the country was 81.42 Mbps, while mobile internet had a download speed of 24.04 Mbps. 5G network has also been rolled out nationwide in multiple cities, further improving the country’s internet connection. In 2022, the average download speed of the 5G network was about 9 times faster than 4G.”

Filipinos spend an average 10 hours a day online, which is higher than the world average of under three hours.

The younger netizens are mostly logging in on Meta’s Facebook and Messenger, followed by TikTok and Instagram while the not so young (over 34 years old as classified by the report) are also doing social media stuff.

Since the pandemic, more access to the internet has made social media and e-commerce the go-to channels for online shoppers and has changed, I

But if the government prioritizes investments in a nationwide expansion of digital infrastructure to make digital transformation initiatives happen, this can happen much sooner. So far, the heavy lifting as far as investing to expand and upgrade the country’s digital infrastructure is being led by the private telcos.

Increasing internet usage also changed the shopping and banking landscape in the country.

This has led to the growth of e-commerce expenditures as more Filipinos were accessing a merchant’s website or shopping apps to buy products or services on any device.

Across channels, e-commerce platforms, and social media applications were the most preferred channels of Filipino online shoppers.

I do consider myself as a heavy internet user and needing to be online practically 24/7 to keep track of work-related correspondence and like the 86.68 million mobile phone users (Statista May 2023), I also spend some time streaming video, and music for some entertainment.

The smart phone is the most important communications and productivity tool in this digital world but without the stable and fast broadband services to access all the digital platforms we need every day, all we can do

There shouldn’t be much debate about this as the clear direction is towards gearing up to become competitive and prosperous in the digital global market with it is call and text, which we can already do using various messaging apps.

If the broadband connectivity is too slow or if there isn’t even and Wi-Fi signal, we are pretty much cut off and will need to physically look for a signal to reconnect with and respond to all the messaging tasks we need to do.

I’m sure you’ve been in this situation where you’re in a building and can’t go online because of poor internet connection and can’t log into that important virtual meeting or have annoyingly intermittent signals making even audio only conversations impossible. This is a gap in our ongoing digital transformation journey that needs the involvement of all property owners in both the

As telcos are aggressively investing to expand the reach of wireless and wired broadband services, there needs to be clear standards for all buildings and public spaces to have integrated facilities to provide connectivity for all tenants, workers, customers, and visitors in their premises. Just as electricity and water are required utilities in the building code, all buildings should be able to provide access to broadband services on demand.

One way to push property developers to retool their existing buildings and ensure that new ones are digitally ready is to come up with a clear standard of rating internet services to reflect the actual speed and quality of digital connectivity available in an establishment.

A rating system being broached by the private sector is a “Connectivity Index Rating” that would be intuitively simple to understand, similar to the five-star rating system that hotels and resorts are using. There shouldn’t be much debate about this as the clear direction is towards gearing up to become competitive and prosperous in the digital global market.

It is actually a big boost to the brand image of an institution, government or privately owned, to get a five-star rating in connectivity.

This means everybody inside an institution’s area of operations will have quality broadband access to all digital services they need to be productive.

Developing the metrics of the Connectivity chief is on the transaction.

JMSU, he insisted, did not allow exploration but “data-gathering.” The deal isn’t a treaty but simply a “commercial and operative agreement between three national oil companies to jointly acquire seismic data.”

JMSU was signed after extensive consultations with the Department of Foreign Affairs and Department of Justice to make sure it did not violate the Philippine Constitution which bans the involvement of foreign entities or individuals in energy development. But it failed the ultimate test of constitutionality in the Supreme Court which declared JMSU invalid for violating the Constitution.

Mañalac insisted JMSU was simply scientific in nature and “does not affect any territorial claims of any country either by the Philippines, China and Vietnam.”

The JMSU coverage is inside the Philippine Exclusive Economic Zone (EEZ).

Now, Mañalac has come out in the open against the extension of SC 38 to operate Malampaya.

He believes Prime Infra does not have the technical qualification to operate Malampaya as it has no previous experience in natural gas extraction and supply.

But the truth is that Malampaya had been successfully operated by an all-Filipino team of experts for at least two decades and which has been retained by the new consortium and reinforced with more Filipino experts.

The DOE, replying to Mañalac’s position, said the technical qualification question had been answered in the first six months of the new consortium’s work, and found it highly capable of operating the facility.

Is it possible for Mañalac to change his mind regarding his opposition to the extension of SC 38 under the new Malampaya consortium despite the DOE explanation that the facility is in good hands?

Maybe, if upon deep reflection, he realizes it can actually serve the national interest as it will reduce the country’s dependence on oil imports and ensure a more stable supply of cleaner energy from an indigenous source.

(Email: ernhil@yahoo.com)

Index Rating is a policy innovation that the President can initiate with the members of the Private Sectors of Advisory Council that I am sure can be crafted expeditiously as this will force the alignment of broadband services to the volume of user traffic in all establishments.