PNOC cites obstacles hampering LNG terminal project

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THE PHILIPPINE National Oil Co. (PNOC) has shared the frustration of the Department of Energy (DoE) on the constraints that have hampered the company’s projects, including the development of what could have been the country’s first liquefied natural gas (LNG) import terminal.

PNOC President and Chief Executive Officer Reuben S. Lista said in a text message on Wednesday that “a rider provision in the Republic Act No. 7638 or the Department of Energy Act, has effectively limited financial autonomy of the PNOC as a corporate vehicle, by requiring Congressional approval of its annual budget.”

Despite the fact that none of PNOC’s budget is sourced out of the general appropriations, Mr. Lista said it has to first seek clearance from lawmakers on its budget before it can earmark and use its own money to fund projects.

He said as a government-owned and -controlled corporation (GOCC), PNOC “is bound by stringent government regulations,” including procurement, joint venture and public-private partnership guidelines, before it can engage, by itself, in a project of a magnitude such as the proposed LNG terminal for the government.

Mr. Lista was reacting to DoE Secretary Alfonso G. Cusi’s statement to media that he would have proceeded with the project and sought partners later. Mr. Cusi is the ex-officio chairman of PNOC.

“The PNOC has earnestly been trying to find ways to accomplish objectives within the limitations and restrictions imposed under it by law and has now been constrained to ask for fiscal autonomy from Congress in order that it be able to meet expectations of its lead agency, the national government and the Filipino people as we seek to regain our relevance and developmental role in the energy industry and the country,” Mr. Lista said.

He also clarified that PNOC as a GOCC is far from being non performing. He said the its board, management and staff “is, in fact, proud to report that it has, under [Mr. Lista] exceeded previous annual net earnings of the company minus its earnings from dividends from its subsidiaries, which are now remitted directly to the National Treasury due to a 2016 directive from Department of Finance (DoF).”

When he assumed his position in November 2016, Mr. Lista announced his plan for PNOC to revert back to an operating company from a mere holding company for its subsidiaries PNOC Exploration Corp. and PNOC Renewables Corp.

He said as the corporate arm of the government in energy projects, it has the mandate to engage in energy business and projects in behalf of the government and Filipino people — including the much-coveted LNG terminal project.

“It was in this spirit that the statement that it might be better to abolish PNOC if it will not be empowered with the authority and autonomy necessary to effectively participate in the highly-competitive energy industry was made. The statement was borne out of shared frustration from bureaucratic red tape that has been the stumbling block for the PNOC’s ability to mobilize its funds for much needed projects of national significance to be instrumental in contributing to nation building and making a difference to improve the quality of life of every Filipino,” Mr. Lista said.

The statement by Mr. Cusi that it might be best to abolish PNOC “relating to these budgetary constraints and how it has hampered effective corporate governance with the means to be at par with the private sector have been taken out of context,” Mr. Lista said.

Last month, PNOC announced that it had “postponed until further notice” the process of selecting a partner for the LNG terminal project.

Mr. Cusi had envisioned the project to transform the country into a regional LNG hub, saying that it had been performing as one.

In a notice posted on its website dated Nov. 21, 2018, PNOC said it had postponed the pre-eligibility activity that was supposed to be on Dec. 4. It also postponed the submission date of eligibility documents. — Victor V. Saulon