PNOC to challenge Italian firm's bid for first natural gas pipeline in RP

MANILA, Philippines - To ensure that the government would get a better deal, state-run Philippine National Oil Co. (PNOC) said it is ready to challenge the offer of the consortium led by a unit of Eni SpA. of Italy for the construction of the country’s first natural gas pipeline, a ranking PNOC official said over the weekend.

The PNOC official, who requested anonymity, said they expect to come up with the “Swiss Challenge” at the soonest possible time.

But the official said that “there is no deadline” for the said challenge but they prefer that “it would be as soon as possible.”

A Swiss challenge is a form of public procurement in some (usually lesser developed) jurisdictions which requires a public authority (usually an agency of government) which has received an unsolicited bid for a public project (such as a port, road or railway) or services to be provided to government, to publish the bid and invite third parties to match or exceed it.

Some Swiss challenges also allow the entity which submitted the unsolicited bid itself then to match or better the best bid which comes out of the Swiss challenge process.

According to the PNOC official, it would also be possible that PNOC might form a joint venture with the Eni consortium.

Aside from the Lopez group, PNOC also holds a franchise for the gas pipeline project.

Last week, members of the consortium namely Abu Dhabi-based Sultan International Holdings, pubic-listed Abacus Consolidated Resources Holdings Inc. and Saipem SpA., visited President Arroyo and bared their plans to build a $1.2-billion natural gas integrated project.

Saipem is the engineering and construction unit of Eni, Italy’s largest industrial company with a market capitalization of at least $138 billion.

The group signified interest to construct the 100-kilometer Batangas-Manila natural gas pipeline, a liquefied natural gas (LNG) terminal and a 600-megawatt power plant using the excess capacity of the Malampaya gas project.

“The gas supply would justify the setting up of an anchor load or power plant, which in turn will make the construction of the pipeline feasible,” Abacus said in a statement on Friday.

Former PNOC director and Nacionalista senatorial candidate Ramon Mitra earlier pointed out that need to establish the gas pipeline to support the country’s energy independence.

“We’re hoping before the term ends, of the President, we can get that (Batman) going already. We can sign the deals already so we can move forward,” Mitra said.

Mitra noted that there are already a number of investors that are willing to invest in this pipeline project.