Senator Alan Peter Cayetano has called for a suspension of Manila Electric Company (Meralco)’s Competitive Selection Process (CSP) for 600 megawatts of baseload supply starting next year, amid concerns regarding fairness.
"So Madam ERC, I think you should postpone Aug. 2 and look into, sort this out first,” Cayetano said during the hearing of the Senate Committees on Energy and Committee and Ways and Means on Thursday, July 18.
Cayetano made the call following discussions with Meralco’s representative Atty. Jose Ronald Valles wherein he found out that older plants, including the Malampaya gas field, were disqualified due to "arbitrary" terms set by Meralco when it comes to the age of the plant.
He suggested this in the wake of questions over the terms of reference set by Meralco for its CSP that the senator said appeared to be tailor-fit for the utility’s favored suppliers. He was referring to the phrase “if the plant is more than 10 years old” as indicating that older power plants were automatically disqualified from taking part in the CSP.
“It doesn’t take an expert to see na parang may pinili na ang Meralco (that Meralco somehow picked) just by the terms of reference (that prevent First Gen plants from bidding). Parang ayaw ng Meralco sa (Meralco seems to dislike) Malampaya, hindi ba (right)?” he said, referring to the Lopez family-led renewable energy firm established in December 1998.
"The point I am driving through is because of that simple decision, you disqualified those plants using Malampaya gas, is that right? That's the net effect of that." Cayetano said.
Cayetano said even the Department of Energy (DOE) and the Energy Regulatory Commission (ERC) “had some questions about this.”
Cayetano argued that the unfair CSP and treatment would discourage foreign investors from participating in energy exploration and drilling in the country.
“Paano tayo makakahikayat ng foreign investors para mag-drill at mag-explore ng energy kung hindi natin tatangkilikin ang Malampaya, kung ibo-box out natin ito sa lahat ng bidding (How can we encourage foreign investors to drill and explore energy if we will not promote Malampaya, and we will box them out in all bidding processes)?” he said.
Cayetano also scored Meralco’s redefinition of ‘greenfield,’ which he believed limited participation in the bidding process.
“Ang problema ay may sarili kayong definition ng ‘greenfield.’ Kaya lumalabas, pinipili niyo na kung sino ang mananalo sa bidding (The problem is, you have your own definition of 'greenfield'. It turns out, you're choosing who wins in it),” the senator told Valles during the hearing.
In the hearing, the ERC clarified that the industry’s definition of ‘greenfield’ refers to projects that are “not yet existing, constructed, and financed.”
Meralco, meanwhile, defined it as plants that are “operational as of January 2020.”
Given these concerns, Cayetano proposed to the DOE and ERC to suspend the August 2, 2024 deadline for the actual bid submissions to allow for further clarification of CSP rules and pending issues.
“I think the DOE and ERC should seriously consider stopping. It wouldn't cause too much delay clarifying all these rules and pending cases,” he urged the panel members.
While Cayetano clarified that he's not proposing to let Malampaya win the bid but if they lose, he said: “Can we honestly say that we are promoting indigenous gas in the Philippines?"
“If all of us are saying dapat yung pinaka-mura (should be the cheapest) and all of us are saying, dapat may mix at gamitin ang sarili, pero talo sila sa bid parati or bawal sila mag-bid tapos meron namang supply ( there should be a mix but they always lose in the bidding or they are disqualified to bid but there's supply), why would foreign investors come in to dig more wells for indigenous gas?” he pointed out.