DOE aims for lesser foreign dependence on energy resources

by Manuel CayonApril 26, 2016

from Business Mirror

GENERAL SANTOS CITY—The Department of Energy (DOE) is embarking on a long-term energy development blueprint that seeks to cut down on dollar-depleting foreign dependence on oil and gas development.

The formula would be simple: develop local contents for the currently imported oil products and mass transport systems; invite more local talents; and faster deployment of local innovations in the energy sector.

Director Jesus T. Tamang of the DOE’s Energy Policy and Planning Bureau told the BusinessMirror at the sidelines of a recent media orientation on energy here that only an increased reliance on local talents and resources in the energy sector will the country move forward to progress.

But as simple as it looks, he said, the sector would need a lot of help from everyone: local science researchers; congressional tweaking of a law on foreign ownership; help from Filipino scientists abroad; better government attention to innovations and inventions; and continued piloting of gadgets, equipment and mass transport systems.

Import dependence

For the meantime, the Philippines could not help but still rely on purely imported oil products for most of its energy needs, notably for electricity and transportation.

While the industry sector is the main consumer of energy production, supplying the needs, as well as improving the transport sector, plays a crucial role in the efficient and timely delivery of goods and services, the manpower to run the industry and to move people, goods and services as the main drivers of the country’s domestic production.

Tamang alluded to the specific determination of the needs of each region, or industry, as an emerging important tool to distribute the scarce, yet expensive, energy resources, especially with the prevailing energy crisis in Mindanao  exacerbated by the El Niño dry spell.

“We have to be very specific in determining which region or sector needs this or that particular level of energy supply, with some excess to avoid a supply crisis,” he said.

“Which would bring us again to face the reality that we are still heavily reliant on pure importation of oil products and machineries for the industry and the transport sector,” Tamang said.

The DOE, however, is now on a conscious effort to undertake research into the possibility of increasing the local content—both in mix blending of biofuel with oil and using local materials, like iron and steel, in lieu of imported machineries and transport systems.

“Here, we need to [undertake] research on the feed stuff available…suitable for biofuel mix with our oil, similar to the current blending of gasoline with coconut oil,” Tamang said.

He added that the DOE is looking into adapting the Brazilian model where the South American country was able to mix as much as 80 percent of its local biofuel with imported oil.

“If we can do that, it only means that we only have to import 20 percent of the needed oil supply, and that would greatly benefit the country,” Tamang said.

Foreign tie-up

For the meantime, Tamang said the Philippines may have no better alternative but to enter into a partnership with foreign companies or experts, “while we continue to grapple with crafting our own technology and harnessing our local resources for local mixing.”

To develop oil and gas production, for instance, the country “still needs 100-percent foreign investment, and these foreign entities would have to bring in their experts, he said.

“Foreign consultants alone would mean bringing out our dollars to pay their services,” Tamang said. “That’s where the critical point is: while we import purely the products that we don’t have, we have to study their technology and research into local materials.”

For example, when the country would have to import buses that run on compressed natural gas to begin relying on locally generated energy source, Tamang said, “we should study [the] technology [for that] and, eventually, develop our own buses from local materials.”

“Initially, we have to import them because we don’t have them,” he added.

The Light Rail Transit-Metro Rail Transit systems in Metro Manila may be case in point in terms of foreign tie-up. Tamang said the materials and technology were all imported, and consultancy remains in the hands of foreign experts. 

“But we have develop our own. Look at the railway cabs developed by the Department of Science and Technology,” he said. “While the promise is there, we are still slow in that area.”

It is in that area that the government should be quick and attentive to support innovations, Tamang said, adding that “we need to look out and encourage more innovations, and to deploy them immediately.”

On the industry side, Tamang said the resurgence of manufacturing in the last six years has also required the energy sector to import more oil and gas to cope with its growth.

A DOE energy situationer posted in 2010 on its web site showed that manufacturing expanded by 16.2 percent over the first semester of that year, which was considered as a major contributor of the industry sector’s 4.8-percent growth.

Tamang told the media orientation here the growth surge experienced by the manufacturing sector has continued to this day.

Tweaking the law

With services sector’s resurgence at 3.1 percent on that same period ascribed to the 10-percent increase in domestic trade, Tamang would expect the sector to have more investments to cope with multifarious energy needs, mainly electricity, amid diminishing power supply for the Luzon grid.

“Many investors have wanted higher percentage of ownership here, but because energy falls under the utility sector, the [60 percent to 40 percent] constitutional limitation on ownership [prevails],” Tamang said.

The decision to revise the ownership issue would have to be addressed by Congress, including some economic provisions that could further entice foreigners to invest, he added.

The same tweaking of a law would matter to local government units to encourage them to be aggressive in inviting local investments on power and transportation.

“We have a move to encourage regional plans now to allow local governments to determine their own needs and to invite investments that they need,” Tamang said. “With the facilities built in their localities, local governments would not have to spend now. Rather, they would benefit from the expected spending of investors on roads and bridges, as well as getting an income from these operations.”

“It just need a tweaking of the law, like pointing out that income should be determined at the point of extraction so that the tax would go direct the local government. It should not be at the point of sale, where the main taxes go to Makati City because their main offices are there,” he said.

Tamang added that  the Mindanao Development Authority (MinDA), the national government’s socioeconomic planner for Mindanao, “would be a very good help and inspiration to coming up with regional plans on energy, because it has helped to reduce by half the permitting, licensing and processing time in investing in power.

The MinDA has also created the Mindanao Power Commission to manage and approve all applications for investment in power across Mindanao.