PNOC may proceed with BatMan pipeline without Congress OK
MANILA, Philippines – The Department of Justice (DOJ) said on Wednesday, March 23, that state-run Philippine National Oil Company (PNOC) has the right to enter into a contract with a private concessionaire to build the proposed 120-kilometer BatMan pipeline without the need for congressional approval.
In a 5-page legal opinion signed by Justice Secretary Emmanuel Caparas, the DOJ agreed with PNOC that the energy firm may proceed with the BatMan project without having to secure a distinct authorization from Congress, citing Section 5 of the firm's charter.
The proposed natural gas transmission system project involves building a 120-km underground pipeline spanning Tabangao in Batangas City to Navotas in Metro Manila.
It aims to transport natural gas to high-growth areas between the two points and is the first in a planned series of similar projects to be carried out in Luzon as the government seeks to develop infrastructure to support natural gas energy projects.
Section 5 of the PNOC charter, which outlines the power and functions of the firm, states, among others, that the state-run company may "enter into contracts, with or without public bidding, with any persons or entity, domestic or foreign, and with governments for the undertaking of oil or petroleum operation, and energy exploitation…"
"We affirm that PNOC's Charter suffices as the legislative authority to operate the project as a gas transmission system by way of underground pipelines. We likewise affirm that the PNOC may contract with a private concessionaire, with the latter financing, constructing, maintaining and operating the project through the applicable period," read the DOJ's opinion.
"We feel, (the charter) provides sufficient basis to support the contention that the PNOC is authorized to engage with a private entity for the purpose of carrying out the project," the DOJ said.
Comply with BOT laws
Despite the favoring ruling, Caparas stressed that, "It goes without saying that the formalities and periods, among others, stated in laws such as the BOT (Build-Operate-Transfer) Law should be religiously complied with."
The DOJ ruling comes after PNOC president and CEO Antonio Cailao submitted a petition regarding the pipeline last October 6, 2015.
In his letter, Cailao asked the DOJ whether the PNOC's charter, Presidential Decree 334, can already be considered as a franchise or legislative authority for PNOC to develop and operate the project as gas transmission system.
PNOC also asked for clarification as to whether it is authorized to appoint a private concessionaire as the operator of the project without the need to secure a separate legislative franchise.
Under a BOT scheme, the private concessionaire will be authorized to finance and construct the main pipeline and its offtake points. Afterwards, legal ownership shall be transferred to the PNOC with the private concessionaire maintaining authority to operate and maintain the project for a set period.
First proposed in 2012, the feasibility of the project was questioned by Meralco Chairman Manuel V Pangilinan who raised technical concerns and raised doubts on whether there was suitable demand for LNG in the country.
The proposed project also hit another roadblock in September 2015 when right of way concerns with the Philippine National Railways meant that the technical consultant had to develop alternate routes for the pipeline.
Various studies have estimated the project to cost between $105 million (P4.871 billion) and $130 million (P6.959 billion), depending on the final route chosen.
Energy Secretary Zenaida Monsada said at the time that this delay would likely mean that the project would no longer be implemented under President Benigno Aquino III's term. – Rappler.com
$1 = P46.40
Gas pipeline image from Shutterstock