Singapore firms betting big on RP

By Amy R. Remo
Philippine Daily Inquirer


THE VOLATILITY OF global crude oil prices continues to wreak havoc on the finances of the Filipino consumer.

Although crude oil prices are much lower this year compared to 2008, there’s no guarantee that could protect Filipinos—especially the riding public and transport sector—in case oil prices bounce back to last year’s record high of $147 a barrel.

As it is, some analysts are claiming that crude oil prices may go up to as much as $150 a barrel within the year, according to Randall Antonio, CEO of Callandra LCNG Fuels Corp.

The country currently imports 98 percent of its oil requirements, thus making the Philippines extremely sensitive to any price movements in the global market.

As such, the Department of Energy has been exploring ways to cut the country’s dependence on costly fuel imports, which include harnessing renewable energy and alternative fuel sources.

However, it may take a while before investments come in and the benefits from such projects materialize.

Clean CNG

One immediately available alternative is to use compressed natural gas (CNG), which is clean burning and emits lower levels of potentially harmful byproducts into the air unlike traditional fossil fuels, according to Callandra.

Callandra—an affiliate of Singapore companies Callandra Holdings Pte. Ltd., and CNG Capital Pte. Ltd.—believes that CNG, being a cleaner type of fuel, could help reduce pollution.

And since it is an indigenous natural resource, it could likewise help curb costly oil imports.

For this reason, Antonio said Callandra was investing $160 million to put up six CNG “fueling districts” or refilling stations in Metro Manila and one processing plant in Batangas.

Antonio explained that these refilling stations, which would be enough to fuel some 5,000 CNG-fed buses by 2014, will be set up in the Mall of Asia area, Manila, Las Piñas, Pasig, Quezon City and Monumento.

According to Antonio, the use of CNG in 5,000 buses is expected to displace some 83 million gallons of diesel yearly.

Callandra is the first firm accredited by the government to develop the country’s first fully commercial CNG fueling infrastructure for the local bus transport sector.

Supply corridor

With its proposed project, Callandra said it targets “to open a new gas supply corridor for Mega Manila and other key population areas, delivering very cost-effective natural gas sources; to contribute to the security of fuel supply for the Philippines; and to strengthen the role of the gas as an environmentally cleaner, cheaper form of alternative fuel in the Philippines.”

“Using CNG as an alternative fuel could offer significant fuel cost savings to the bus operator, aside from the various incentives and tax benefits that the Philippine government has to offer,” the company said.

Antonio said each fueling district would have about 10 pumps with dual dispensers to cater to 20 buses at a time.

He added that the fueling districts will also have faster turnaround time of about six minutes.

By mid-2010, Antonio said Callandra expect two of the fueling districts to be fully operational, catering to some 2,000 buses. By 2012, the firm expects the number of CNG-fed buses to increase to 3,500, and by 2014, to 5,000 buses.

“We’re now talking to various banks. There were already (financing) offers,” Antonio said.

He disclosed that the company plans to tap the debt market to finance about 70 percent of the $160-million investment cost, while the remaining 30 percent will be funded through equity.

Lower prices

Antonio noted that prices of CNG will be lower compared to local petroleum products by about 25 percent.

At present, only Pilipinas Shell offers CNG to 35 buses servicing Batangas, Laguna, Manila and Quezon City, through its “daughter” station in Biñan City in Laguna.

Shell’s main or mother CNG station is near its refinery in Tabangao, Batangas.

Shell’s mother-daughter stations are part of the government’s Natural Gas Vehicle Program for Public Transport (NGVPPT), a seven-year pilot program that will peg the price of CNG at P14.52 a liter, less than half the price of diesel, for participating bus operators.

As part of the pilot program, Shell has exclusive rights to the area where it operates.

Other firms interested in putting up CNG facilities could do so in other places.