Business World, 17 December 2014
By Claire-Ann M.C. Feliciano
THE FEASIBILITY study for the proposed Batangas-Manila (BatMan 1) natural gas pipeline may be completed early next year, with a preliminary draft due for presentation this month giving an indication of the route and preliminary cost estimates, an official from the Energy department said.
Undersecretary Zenaida Y. Monsada said in a recent interview that the study funded by the Project Development and Monitoring Facility (PDMF) of the public-private partnership (PPP) Center is nearing completion.
“The draft of the study will be presented to PNOC (Philippine National Oil Co.) this month for exchange of comments. It will be finalized by the first quarter of next year,” Ms. Monsada told BusinessWorld.
The BatMan 1 natural gas project involves the construction of a 105-kilometer transmission pipeline that will transport and supply natural gas to targeted markets located along its route from Batangas, Laguna and Cavite, and eventually to Metro Manila.
This is part of the state-run PNOC’s aim to develop the country’s natural gas industry and reduce its dependence on imported fuels.
Ms. Monsada said the ongoing study will determine the actual cost of the project, the route of the pipeline, as well as a demand analysis that would identify the potential off-takers of natural gas that will pass through the project.
“The study will also detail how PNOC should go about it,” she said.
She said the project can either fall under the government’s PPP program or under the Official Development Assistance (ODA) Act of 1996.
According to the law, ODA is a “loan or a grant administered with the objective of promoting sustainable social and economic development and welfare of the Philippines.”
The law provides that the ODA “must be contracted with governments of foreign countries with whom the Philippines has diplomatic, trade relations or bilateral agreements or which are members of the United Nations, their agencies and international or multilateral lending institutions.”
Ms. Monsada said the timeline of the project implementation will vary depending on the choice of the PPP or ODA route.
Either way, the Energy department hopes to ground break for the project by 2016.
“We want to start by early 2016. But we have to consider the entire process, which will include detailed engineering and design,” Ms. Monsada said.
“There will also be a lot of permits to secure and paperwork so that will also take time,” she added.
PNOC last April tapped Dutch firm Rebel Group International BV as the transaction advisor for the project.
Energy Undersecretary Donato D. Marcos, for his part, said the department wants this project to be under the government’s flagship PPP program.
“We really want it to be under the PPP because this is a relevant infrastructure project for the natural gas sector,” Mr. Marcos told BusinessWorld separately.
Last May, Energy Secretary Carlos Jericho L Petilla said that upon completion of feasibility study, PNOC would need at least four months to draft the terms of reference for the auction.
The PDMF board in January 2012 approved the inclusion of the BatMan project, along with three other infrastructure projects to receive technical assistance from the PDMF.
The other projects were identified as the Plaridel Bypass Toll Road under the Department of Public Works and Highways; the Manila-Makati-Pasay-Parañaque Mass Transit System under the Department of Transportation and Communications (DoTC); and the Philippine National Railways North and South Lines Development and Extension, also under the DoTC.
According to the PPP Center’s Web site, implementing agencies of projects apply to the PDMF board for technical assistance regarding pre-investment activities, including preparation of project pre-feasibility studies, feasibility studies and financial models, development of PPP options, project structuring, providing transaction advisory services during the bidding process and preparation of contract documents.
The assistance aims to help agencies draft PPP proposals for submission to the National Economic and development Authority (NEDA)-Investment Coordination Committee (ICC), the first step in an approval process that includes concerned local government units, the ICC Technical Board, ICC Cabinet Committee and the NEDA Board.