Knowledge Society – Senate hearings and Philippine Energy sector

Senate Hearings on  ZTE Biraodband Deal 

Like millions of Filipinos, I was glued to the TV watching the Senate hearings on the ZTE Broadband deal. I was shocked at the behavior of many senators. I am thankful that the young senators — Cayetano, Escudero and Roxas — did their homework and asked the intelligent and penetrating questions.

I am quite surprised at how Sec. Neri described his staff at the National Economic Development Authority (NEDA), the country’s highest Economic Planning body. First, he said that the staff tried to verify the figures of the broadband proposal but they simply could not. They tried doing research on the Internet but came up with nothing. Goodness Gracious! They depend on the Internet to validate a deal worth more than 300 million dollars?!

One senator asked if NEDA does feasibility studies. The answer was NO- there is no budget for that.

The Senate hearings confirmed that government agency people simply have no competence to check the veracity of project proposals.

In my experience, if an agency wants to do a project, the usual way is to ask for a grant to do a feasibility study.  The donor would then nominate the consultant, who would come from the same country. If USAID gives the grant, for example, the consultant would be Americans.

The problem here is that the Filipinos would not know if the consultants were correct or not. In my experience with the Dept. of Energy, the  Filipinos have absolutely no idea.

If, like the ZTE deal, a company proposes a project, the agency really has no way of knowing if the project is the best possible deal for the country, as confirmed in the Senate hearings.

As proven in the hearings, the primary criterion for a project is the “commission” given to the powers that be.

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Philippine Energy Sector

I was going through my old magazines and I found the Dec 2005-Feb 2006 Special Edition of NEWSWEEK. The issue was dedicated to the topic of The Knowledge Revolution. While going through its pages, I realized that the Philippines will certainly lag behind in the knowledge economy.

I graduated with a B.Sc .degree in Petroleum Engineering in 1980. I had my practicum in Clausthal Institute of Technology in Germany and had a 7-month on-the-job training at ARAMCO in Saudi Arabia. I went on a study tour in Germany, Mexico and Algeria,

I was the Philippines’ first petroleum engineer. I thought that Philippine oil companies would make a beeline for me. I couldn’t be more wrong. The oil companies in the country, private or State-owned, did not want me at all.

In Dec 1994, I finally worked for the energy sector – at the Department of Energy (DOE), no less. The Secretary’s brother belonged to the same fraternity as my brothers. The Secretary’s Chief of Staff discouraged me from joining the department. When I insisted, he tried giving me low positions, which I promptly turned down. Finally, I settled for the position of Executive Assistant VI or Chief of Staff of the Chair of the Philippine National Oil Co. (PNOC). The DOE Secretary is the ex officio PNOC chair.

I then realized why no oil company wanted me. To my utter shock, the people at PNOC and DOE, who were supposed to be the country’s most knowledgeable people in the field of energy, knew practically NOTHING about ENERGY!! Oh sure, they talk about energy, write about energy, speak about energy, but they DO NOT UNDERSTAND the basics of Energy, especially OIL and GAS.

The Energy Secretary asked me if I knew about Natural Gas Pricing because of the negotiations going on about the gas field discovered by Shell and Occidental. I answered in the affirmative.

Meanwhile, the gas negotiations were going on and I realized from what I had read in the newspapers that the DOE and National Power Corp (NPC) officials did not seem to know much about oil and gas. So, I took the initiative and gave the Secretary a report. I explained some basics in gas pricing to aid the government negotiators.

I was then asked to attend a Press Conference given by the Secretary. I was dumbfounded when the Secretary could not answer a reporter’s question and passed it on to the Undersecretary in charge of the negotiations. The undersecretary hemmed and hawed until I blurted out the answer. The official next to me repeated what I said and the undersecretary picked up on it.

I then realized that I had to make a complete report that would explain to the Secretary the very basics of Natural Gas.

The DOE officials, especially the undersecretary who now calls himself the “father of the natural gas industry in the Philippines,” kept on repeating that the DOE would not interfere in the negotiations. They swallowed Shell/Oxy’s argument that since state-owned NPC was one of the buyers of the gas and the government co-owned the gas field, the government could not participate it the negotiations because it was both the buyer and the seller.

In my report, I showed the fallacy of the oil companies’ argument by reviewing the experience of European governments’ oil and gas experience. I also criticized the previous studies done by   Japanese and an American consultants.

The Secretary, a UP professor, must have been quite impressed with my long report. He immediately asked President Ramos to issue an Executive Order creating the Philippine Gas Task Force to be composed of several government agencies. The DOE then changed its stance from being a disinterested observer in the negotiations into being an active and “hands-on” negotiator.

Instead of promoting me, the Secretary seemed to prefer that nobody would know about me. When the Undersecretary still persisted in giving wrong information to the press, I made a Memo to the Secretary, cc the undersecretary about some technical points.

It was then that I met USAID’s consultant at DOE.

The American consultant expressed surprise that somebody else knew something about oil and gas at DOE. He told me that he did all the research, studies, and everything else that DOE claimed to have done regarding natural gas.

To make a long story short, I was made the head of the Secretariat of the Gas Task Force, but on an unofficial basis (no honorarium whatsoever) and later Team Leader (The Philippine Counterpart team was composed of DOE, PNOC and NPC people) that went to Hawaii to create computer models on Gas Pricing, which became the core of the DOE recommendation to President Ramos.

Meanwhile, the Undersecretary became the Gas Office consultant paid for by USAID while the American consultant was sent home packing. This undersecretary later became president of one of the PNOC companies.

When the term of Ramos ended, I had to leave DOE. The new Secretary replaced me with a clerk who had absolutely no technical experience.

An assistant secretary who came almost at the same time with me, who is a lawyer with no engineering or scientific background, became Undersecretary and now is the President of NPC.

Apparently, at the DOE / PNOC / NPC, the less you know about energy, the more likely you will be be hired and promoted to the top.

Knowledgeable people like me are thrown out of the energy sector while people with little or no knowledge in the field are made heads of companies.

The Philippines has a long long way from becoming a knowledge society.

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