Prior to 1986, the Philippines was hit hard by the oil crises of 1973 and 1979. The Yom Kippur war between Arabs and Israelis had the former limiting oil production because the US backed Israel. This was true for all the US’ allies at that time, including the Philippines, which hosted military bases.
Marcos created the Ministry of Energy and the development of a long-term energy security plan fell on the lap of Geronimo Velasco in 1979. Velasco was an engineeering graduate of Mapua Institute of Technology. He made a name for himself as the man behind the Standard Vacuum Oil Company in the Philippines. This subsidiary would later be bought out by the Philippine government and would form the nucleus of the Philippine National Oil Company.
Velasco management and engineering prowess was first tapped by Harry Stonehill. Stonehill was the American GI who never left the country after World War II. He went on to become the richest American in the country with large business holdings in tobacco, real estate, plantations and the Republic Glass Corporation which Velasco put up and managed for Stonehill.
When Dole, the American multinational agricultural processing company set up shop in the country, it was Stonehill and Velasco who laid the groundwork for the establishment of Dole’s plantations and cannery in Mindanao. Long story short, Velasco was already a made man when Marcos tapped him to join his Cabinet as Energy Minister.
It was Ronnie Velasco who developed the energy security plan for the country. This involved setting up Petron to keep prices in check as the state-owned corporation engaged in refining and wholesale and retail distribution of petroleum products, to keep in check the large multinationals, Caltex and Shell. It was Velasco who also pioneered in oil exploration in Palawan and the development of the country’s geothermal energy fields.
Boo Chanco started out as the Director for Public Affairs for the then Ministry of Energy the Philippine National Oil Corporation. After Marcos was ousted, Ronnie Velasco went into exile in San Francisco and Chanco surfaced at the Lopez Group, under ABS-CBN. He has been very vocal about energy security but fails to cite the critical errors under the Cory administration, which abolished the Ministry of Energy the minute it came to power. There is also the matter of privatization of the assets of the PNOC, some of which fell conveniently under the control of the Lopez Group’s First Philippine Holdings, when Paul Aquino, the father of Bam, was appointed the President of the PNOC’s Energy Development Corporation.
When the first oil crisis hit us, we were 96 percent dependent on oil for our energy requirements. The rest comes from some hydroelectric dams. Our mission was to diversify the geographical sources of our oil needs as well as develop all domestic energy sources.
There was no inventory of domestically available energy resources. The first few years were spent developing this list, from domestic oil, geothermal, coal, hydro and unconventional energy sources like solar, wind and biogas. Every little one counts.
The crash program started to bear fruit. Some modest but commercially viable reserves were discovered off Palawan… Nido, Cadlao and Matinloc. These fields produced oil but were too small for our needs.
Union Oil of California produced geothermal energy in Tiwi and Makiling-Banahaw. PNOC started with a 3 MW pilot plant in Tongonan, Leyte and soon became a major producer. Eventually, we also produced in Mt Apo and in Negros Oriental. In the end, we were the second largest geothermal producer in the world.
We secured oil supplies through diplomacy. To ensure our oil shipments arrive on time and not diverted, we developed our own oil tanker fleet including two VLCCs or Very Large Crude Carriers.
But our foreign exchange reserves were shaky. So we developed an oil rationing plan, on the off chance we may not be able to afford to buy everything we need.
We were ready to go, complete with ration coupons already printed. Instead, we decided to start with an energy conservation program or what we called enercon.
It was two-pronged: an information campaign that sought to convince our people not to waste energy and a series of directives that among others banned the importation of luxury vehicles deemed to be gas-guzzling. DTI also imposed energy efficiency standards which manufacturers of appliances must comply with.
We were doing a lot of r and d on unconventional energy. We worked with piggeries to test biogas. We earned the ire of motorists in Bacolod where we first road tested alcogas. Our blend didn’t do their engines any favors.
Truckers ridiculed us when we forced them to use coco diesel. They said they have to bring two toothbrushes when they go on trips, one for their teeth and the other to brush particulates from the coco diesel gumming their engines. But at least, their exhaust smells like the latik we put on suman.
Energy security in our context now means not having to use oil for fuel. Petroleum should be increasingly seen for its higher value uses like petrochemical products.
The good news is, our power sector, the biggest energy user, was weaned from bunker fuel oil and diesel. The one big problem was the transport sector which remained totally dependent on diesel and gasoline.
That’s where we are today. We are worried about energy security now because our jeepneys and buses as well as cars still use petroleum fuel products whose prices are going through the roof.
This vulnerability should have been addressed by mass transit train systems powered by electricity.
Indeed, DOTr today could have used EVs in their jeepney modernization program. I understand that private transport operators who shifted to EVs are happy they are not affected by high diesel prices.
There are proposals to buy cheap Russian oil. But that’s a solution that brings in even more serious problems.
There is a reason why there are few takers for Iranian and Russian oil these days even with the hefty discounts. We risk getting sanctioned and our banks thrown out of SWIFT. We will end up being limited to Russia and China for our trading partners. OFWs may have problems remitting to their families here.
There are other proposals to enhance energy security. Setting up a strategic oil reserve is one. But neither the government nor the oil companies may be inclined to fund this. It is also only a buffer during instances of severe oil supply disruption rather than a price stabilization tool.
Dumping oil deregulation won’t bring down pump prices. We still have to pay international market prices for imported oil.
A government study concludes that price regulation is not effective for net oil importing countries with a small share in the global market like the Philippines.
“Small importers are simply too small to influence the impacts of these major events on the market price. That is why domestic price regulation is difficult. The deregulation policy is meant to avoid the cost of defending misaligned prices.”
Energy security means we must invest more on renewable energy like solar and the batteries associated with it. Geothermal energy is fine but it seems we have developed all that Mother Nature gave us. Convince the indigenous tribes to let us develop our ample hydro resources.
First Gas is talking about using hydrogen for their power plants. A week ago, researchers in a university in Norway had for the first time powered a gas turbine using pure hydrogen as fuel.
We need a comprehensive plan that can deliver quickly. Our economy must not be constrained by this energy dependence on imported oil. That’s so yesterday.
Notice how Chanco omits the history of energy security in the country with no mention of how the Cory administration abolished it, leading to the power crisis as her term came to a close because of the non-development of additional supply due to increasing demand and the fact that her government did not allow the operation of the Bataan Nculear Power Plant. It was only after Fidel Ramos became President that the Department of Energy was created again by virtue of Repulic Act 7638.
When the Ministry of Energy was created in 1979, Velasco, was appointed by President Marcos, as it first Minister. He remedied the country’s dependence on Middle East oil and lessened the huge expenditure of our dollars by establishing geothermal power, and the use of other alternative sources of energy including the development of nuclear energy. In 1973, the country is 92 percent dependent on imported oil. This was reduced to 57 percent in 1984 and further to a 44 percent in 1985 under the genius of Velasco.
Velasco was unceremoniously dumped from his position as Philippines “Energy Czar” in 1986, when George Shultz and Paul Wolfowitz orchestrated a “regime change” military coup against the Marcos government. The immediate consequence of that imperial act was the mothballing of the completed nuclear power plant, thus destroying in one shot the potential for the Philippines to emerge as a modern industrial nation, as envisioned by the President Marcos plan for 11 major industrial projects.
Corazon Aquino through the Presidential Commission on Good Government (PCGG) charged Velasco with having allegedly committed corruption, only to be declared later innocent by the Supreme Court.
Twenty years later, in 2006, Velasco released a book, Trailblazing: The Quest for Energy Self-Reliance, which revealed both the dynamic development policies of those years, and the lies and foreign manipulation which led to the 1986 destruction of the Philippines’ potential.
In a series of discussions and an interview with Executive Intelligence Review in 2006, Velasco explained why it took 20 years to write the book:
“We did not have the political space until now. Anything we said during or after that time, we were just dismissed as ‘Marcos’ boys’. It took us all of these years in order to get the space for the public to even listen, to hear.”
Velasco said in the interview, that he’d read the George Shultz autobiography, Turmoil and Triumph, and that “it was very obvious that he was the one that orchestrated the Marcos debacle. Obviously, based on this book, (President Ronald) Reagan didn’t want to do it”. He also pointed to the fact that the head of the Anglo-Dutch Shell Oil operations in the Philippines, Cesar Buenaventura, joined Shultz in demanding that the nuclear plant be shuttered – much to the advantage of Royal Dutch Shell.
Velasco understood the necessary role of state industries which goes to the heart of why he and President Marcos were dumped by the rising neoconservatives in Washington. In his book, Velasco wrote:
“Unlike in a private firm, where the CEO’s principal responsibility is to keep the shareholders happy, in a government corporation our job was ultimately to promote the national interest.”
He had a deep regard for the American System and the U.S.A., where he developed his business skills as a young man, and was saddened to see the destruction of the machine tool capacity then taking place in the United States. Velasco said that “the strength of America was its capability to manufacture. Nobody else could manufacture with the strength of market you have, with the strength of the quality that you could do, and in the capability that your people had. But this seems to be disappearing now”.
In 2006, Ronnie Velasco was full of humor and goodwill, but also saw little hope that his nation could get through the disastrous economic crisis afflicting the Philippines. Velasco explained that the Bataan Nuclear Plant had been shut down not for technical reasons, but from political pressure, from forces outside the nation, and called for the people present to take responsibility for exposing the myths and lies which had allowed the population to accept such an attack on their own future.
The above is excerpted from The Kahimyang Project. It was written after the death of Velasco in 2007.
Chanco is an unabashed apologist of the Lopez’s as they gave him a livelihood right after Marcos’ ouster and Velasco’s exile. If you have not noticed it, the opposition is again using geologist Kelvin Rodolfo and what remains of its media machinery to oppose the commissioning of the Bataan Nuclear Power Plant, which as been mentioned by Marcos as one of his priorities in order to alleviate the energy crisis.
The reason why we have been suffering from energy insecurity since 1990 is because of the demarcosification program pursued by the Cory administration. Not only is this true in the energy sector but in other aspects as well.
The Ramos administration went on a privatization binge in 1992 and sold the most valuable assets of the government in power generation to private companies. It partially privatized Petron with the initial public offering and the entry of Saudi Aramco as a minority shareholder. All of these were at the expense of the Filipino people because there was no provision for any contingencies down the road such as the situation we find ourselves in now.
The landmark events in Philippine history from 1983-1986 did not happen by chance. They were orchestrated for the Americans to get back in the country. This is why we continue to lag behind our regional neighbors.
It will be interesting how BBM will deal with the oligarchs. Among the current crop, there is not one who is focused on agriculture. Most of them are in rent-seeking businesses making money off the captive Filipino consumer. This includes the energy and power sectors.
It will take more than six years to make right what was done wrong for thirty-years. Duterte began the work. BBM must continue it. We definitely need to change the political structure to begin with if the Philippines is to finally catch up with our regional neighbors. As I have said earlier, it is the most inopportune time for Marcos to have become President but if he pulls it off, it is not only redemption and vindication for his family, but it is also a chance for him to get out of his father’s shadow and finally prove to all and sundry that he is his own man.
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