Proactive stance needed

It is good that Shogun Ships is taking full responsibility for the sinking of the ill-fated tanker, MT Terranova, which it owns.

While it’s regrettable that such a mishap has happened, there is some consolation in the fact that systems are in place in the country and globally to determine accountability and clear procedures to indemnify those affected.

Transporting critical resources such as fuel, in whatever form, is a global endeavor after all. Fuel is a necessity for countries, industries and our everyday lives.

Shipping fuel always carries great risk, but a country’s very stability and security, life and civilization as we know it, depend on it.

That is why international rules have been established on proper actions and accountabilities should a maritime disaster occur.

Such a disaster did indeed happen when, due to extreme sea conditions last week at the height of Super Typhoon Carina, oil tanker MV Terra Nova sank off Limay, Bataan, reportedly carrying 1.4 million liters of industrial fuel oil and bound for users in the Visayas region.

While the government through the Philippine Coast Guard (PCG) tried to contain an oil spill, environmental and anti-fossil fuel groups have expectedly been busy trying to blame the supposed owner of the cargo.

But whoever the charterer or the cargo owner is does not matter in cases like this. That’s because both international and Philippine maritime laws, specifically RA 9483, clearly identify the ship owner as the one responsible in such cases.

The Oil Pollution Compensation Act of 2007 clearly states the owner of the ship at the time of the incident shall be liable for any pollution damage caused by the ship as a result of the incident. Such damage include reasonable expenses for clean-up operations at sea or on shore as well as loss of earnings suffered by owners or users of property contaminated and environmental damage.

A good analogy would be ordering pizza from a booking app. If the motorcycle rider runs over a pedestrian on his way to delivering your pizza, you are not responsible for the hospitalization of the pedestrian, even if you bought the pizza. It is the driver and the food delivery company’s responsibility.

Since who should be responsible is already set by law, the better question to ask is why the PCG allowed the ship to sail, given that there was an expected typhoon? And is the vessel cargo-worthy?

Perhaps it’s time government does more to ensure that shipping critical cargo becomes safer. It can also look into procuring its own oil spill response equipment and ships to ensure immediate response, without having to wait for additional support from other countries

What’s best for everyone

Republic Act 9136 or the Electric Power Industry Reform Act (EPIRA) declared that it is the policy of the State to ensure the quality, reliability, security and affordability of electric power supply, and to ensure the transparent and reasonable prices of electricity in a regime of free and fair competition and full accountability.

The same law provides that a distribution utility has the obligation to supply electricity in the least cost manner to its captive market.

Pursuant to this, the Department of Energy (DOE) directed that all DUs including the Manila Electric Company or Meralco should procure their power supply through an open and transparent bidding called the competitive selection process (CSP) prior to entering into power supply agreements (PSA).

The DOE defines the CSP as a process wherein a power supplier, or in the case of off-grid areas, a new power producer, is elected to supply electric power requirements of a DU through transparent and competitive bidding undertaken by a DU to secure supply of electricity based on the evaluation criteria to achieve least-cost supply to its captive market.

In the case decided in 2019, the Supreme Court emphasized that competitive public bidding is the most efficient, transparent and effective guarantee that there will be no price gouging by DUs. The Court also directed that all PSA applications submitted by DUs to the Energy Regulatory Commission on or after June 30, 2015 shall comply with the CSP.

The CSP however has once again hogged the limelight after the Taguig Regional Trial Court Branch 15-FC issued a temporary restraining order against Meralco’s planned bidding for an additional 1,000 megawatts of power supply.

The RTC granted a petition filed by members of the consortium operating the Malampaya gas field for the issuance of a 72-hour TRO against Meralco’s conduct of a CSP. The group has claimed that pursuing the bidding can put indigenous natural gas at a disadvantage based on the terms of reference of the bidding.

The consortium, which includes tycoon Enrique Razon’s Prime Energy, Prime Oil and Gas Inc, UC38 LLC, and the PNOC-EC, said that awarding PSAs only to suppliers using imported fuel will affect the Malampaya project which supplies natural gas to power plants and has provided 30 to 40 percent of Luzon’s electricity requirements.

Meralco however has insisted that it followed DOE and ERC rules on the conduct of biddings.

There are claims that the real reason for resorting to the courts is that Malampaya gas could not compete based on price and that not getting a PSA from Meralco means they could not secure the market for the supposedly cheap Malampaya gas.

The surprising thing though is that even First Gen, which is the sole off-taker of the depleting Malampaya gas, did not question the CSPs.

Meralco’s bidding for its 600 MW requirement earned the interest of the country’s biggest energy players - the Lopez Group, the Aboitiz Group, the San Miguel Group and other energy industry mainstays like Quezon Power and the Consunji Group.

More competitors means better offers, ultimately benefitting consumers.

So why stop the bidding?

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