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With over 95% of the country’s transport is running on fuel, Philippines is heavily dependent on imported oil and we are affected by the global rising of prices.

Compressed Natural Gas (CNG), a clean and cheap fuel for public vehicles will be encouraged to use by the government officials. Infrastructure and delivery stations are said to be built by 2011 but the contractual arrangement with multinational energy giants like Shell and Chevron Texaco limits the access to tapped supplies and raises doubts whether the government’s plan will be imposed or applied.

The use of natural gas has an effect on the nation’s standard living, from the retail price of nearly 50% to an inflation rate of 12.5% this August. Countries who use natural gas had saved energy import bills thus creating more economic and job opportunities. Thailand, for example is using CNG and it really helped their economy from estimated 82 CNG-fueled cars in 2000 to more than 70, 000 vehicles, they want to expand its CNG supply to meet the 100,000 vehicles run by the natural gas. While Thailand aims to manufacture and export CNG-fueled vehicles, Malaysia has 35, 000 CNG-fueled vehicles mostly taxis. In comparison, the Philippines boasts a mere 17 CNG-run buses and no gas-powered automobiles six years after prioritizing the use of natural gas for public transportation.

Estimated, there are 25.7 to 39.5 trillion cubic feet of untapped natural gas in the country but price policies thwarted those designs. In order to promote the use of natural gas for public transportation, Arroyo asked Shell-the multinational energy company which developed the country’s main CNG pipeline and first delivery station- for a “bare minimum” price. Shell arrived at a “break even” price of 15.42 pesos or $0.33 per liter last year unlike in Singapore which costs equivalent to 35-42 pesos per liter. It is said that bus operators could save between 250,000 to 1 million pesos in annual fee if they continue to use CNG.

Missed deadlines caused the delay of the opening of the first CNG station. Foreign investors and private transportation were then dismayed to learn that the supplies were reserved only for select local bus operators that had invested in the technology.

The source of the problem is the contract between the government and private developers as the critics says. The $2 billion Malampaya natural gas project located in deep waters off the northwest coast of Palawan island was first discovered in 1989 and said to be the largest natural gas source in the country. They point in particular to delays in the opening of the first CNG station, originally scheduled for 2005 but not completed until earlier this year. Roberto Torres said, “First Shell said there was a problem in the compressor and then there was a problem in the safety features.” Roberto Torres is an aggrieved bus owner who invested 30 million pesos in CNG-fueled buses but have not yet go on the road because of CNG shortages.

Cris Rea, manager of HM Transport – A CNG bus company- has said that even now the newly opened station is often unreliable or shut down due to technical glitches. Other energy companies have expressed interest in investing and building daughter CNG stations, but the Malampaya consortium has refused access to the supplies, said one energy consultant who requested anonymity.
Investors such as Energtek, keen to help convert polluting three-wheeler vehicles to cleaner natural gas, have been turned away despite the fact the sole CNG station is running at under 10% capacity. Complexities in the government’s contract limit the fuel’s distribution to a handful of CNG-run buses.

“Why does the government can’t force the consortium to make CNG gas more widely available?” said Edwin Fernandez, Land Transportation Franchising and Regulatory Board consultant, despite the fact that it is part of the minority holding of the Philippine National Oil Company. Also, Behag added that the consortium must recoup its investments, which included the development of a 504-kilometer underwater pipeline to transport the processed gas from the platform to Batangas province.

Shell is reluctant to open the station for other users since it was not part of the said agreement with the government. That is why the only one existing CNG station was running at only 10% of its capacity.

The Government said to build an alternative 420 km. pipeline rather than deregulating CNG prices and encouraging consortium to expand this will ensure private user access in Metro Manila by the year 2011. Mariano Salazar, Energy undersecretary has said that part of the government plan is to establish 21 more CNG filing stations but he failed to address where the financing and technical expertise would arise.