Rough cuts | One big nebulous dream

WE READ in the papers that a Memorandum of Understanding (MOU) has been entered into by the Province of Davao Oriental with a supposed giant company based in Hong Kong, the Pionaire Finance Limited (PFL).

The MOU appears to have sealed a partnership agreement between the eastern Davao Province and PFL for the development of a 1,500-hectare industrial park estimated to cost over $20 billion. The location of the industrial park is to be in the Municipality of Banaybanay.

If we have to consider the area of the park to be developed, and the nature of the industries that the prospective company locators will undertake then it is easy to imagine that the project itself is grandiose and that it could transform the province into one that is bustling with economic activities and its government getting huge revenues from taxes, and the people earning more than enough thus augmenting their disposable income.

After all, what economy will not surge with such bold disclosure by PFL executives that the industrial park will be hosting a 2,700 megawatt liquefied natural gas (LNG) combined cycle power plant, fertilizer and cement plants, an international port and cargo terminal, a 10-million metric tons of storage tanks and terminal for crude oil, a steel plant. Wow! All those are mind-boggling.

According to Ednar Dayanghirang, the executive assistant of Gov. Nelson Dayanghirang, the primary responsibility of the province as partner of PFL is to secure the acquisition of the 1,500-hectare land for the industrial park as well as to take care of addressing the social impact of the project once it is being implemented, more particularly the possible dislocation of residents of the barangays that would be encompassed in the development.

However, the question that this early, is begging for honest-to-goodness answer is, “How enticing would be the PFL-Davao Oriental Industrial Park Project to prospective locators that they may be interested to put up their plants and facilities in the area?”

One example is the 2,700 MW LNG combined cycle power plant. As of Mar. 20, 2018, the available capacity of existing Mindanao power plants has a total of 2,051 MW. The island’s system peak or maximum power usage in that particular day was 1,660 MW. That leaves the Mindanao power supply a gross reserve of 391 MW. With more generating plants soon to be commissioned in the island, the available capacity will have no other way but up.

Besides, other than the Malampaya LNG wells, there are no other known local sources of this kind of clean fuel. And while there is a known LNG deposit somewhere in the bosom of the Agusan marsh, the volume is not yet known. Thus, extraction of such natural fuel to feed another LNG power plant could not be determined as commercially feasible.

Hence, if one investor will gamble to build an LNG-fed power plant, the likelihood is for the owners to source their fuel out of the country. And that would mean additional investment that would definitely be factored in the determination of the cost of power that it will sell to distribution utilities. But that is jumping ahead too far. That still nebulous LNG-fed combined cycle plant would only have a chance of feasibility if the Mindanao-Visayas power grid will be interconnected.

Then there is that another thought-sapping project mentioned by the park proponent — the building of a 10,000-metric tons capacity crude oil storage tanks.

If we have to use the average tank load of European-owned oil tankers now plying international waters which is between 75,000 to 100,000 metric tons of fuel, how many vessels fully loaded with the precious commodity are needed to maximize the use of the 10 million metric tons tank?

Only oil producing countries like Malaysia, Indonesia, or Brunei which are nearer to Mindanao can afford to use the storage tanks for depositing whatever cannot be accommodated in their own storage facilities. As for the local oil refiners and suppliers, the big ones already have their own storage depots in Misamis Oriental, in some Visayan cities, and in Batangas. So, they could not be potential clients.

We also wonder whether a cement factory would be allowed to operate inside that dreamed industrial park where there may be other plants that would be extremely sensitive on dust emission. Remember the Oriental Property Venture experience in Ilang, Davao City?

Besides, this kind of industry is extractive. It has to get its raw material requirements for the manufacture of cement from sources nearest to the plant. Will Davao Oriental sacrifice the province’s present ideal environmental state by having it degraded to feed the cement plant needs?

Of course it is already late to caution the Davao Oriental provincial executives to be wary of what they have gone into for their local government. The MOU has already been signed.

But it will not cause harm to any one, more so to their province if they should be extra careful in every step they take in the pursuance of the project. Or, if they are not, the province might end up hit by this common adage, “Fried by its own lard.”

By the way, did the governor and other executives of the Eastern Davao Province bother to ask the Province of Davao Occidental why it suddenly withdrew from its partnership with the PFL? If they did not, then they could be guilty of not exercising due diligence in knowing a partner in a supposed multi-billion dollar endeavor.

Posted in Opinion