The number one thing investors look for in a country is a stable and predictable political environment, and I think this is also where the Philippine government often fails. Our flip-flop politics often unnecessarily gets in the way of doing business.
Take the case of the Pandacan depot. The economic importance of this depot cannot be overstressed. The depot supplies roughly 50 percent of the country’s total fuel demand and 100 percent of the transport and industrial sector’s lubricants. More than 1,800 retail stations in Regions 1 to 4 —of which about 500 are in Metro Manila—get their fuel supply from the facility.
The depot also serves 70 percent of the shipping industry’s fuel needs and 75 percent of the region’s aviation fuel requirements.
Last week, Manila Mayor Joseph Estrada reminded oil companies they have until Jan. 21, 2016 to move out of the Pandacan depot and relocate their oil storage facilities.
Why? The city government said this is for the safety of the residents in the area. But the true reason is flip-flopping policies.
The area in Pandacan has been an industrial zone for the past 90 years. But city ordinances 8027 passed in 2001 and 8119 passed in 2006 rezoned it, designating it for commercial use.
In 2009, city ordinance 8187 again reclassified the area as a heavy industrial zone, allowing the oil depot to remain in Manila.
But in 2012 another city ordinance, 8283, reclassified the area again into a commercial zone.
Talk about the lack of stability and predictability in policies and regulations.
How can people, more so investors, trust our government with such flip-flopping?
There is nothing wrong with the Pandacan depot staying where it is. The oil depot has been operating for close to 90 years there with no major incidents.
In fact, just in 2009, Representatives of Manila City Hall thoroughly inspected the oil depot and gave its safety measures the so-called two thumbs up.
After an ocular inspection of the various security measures and facilities in the Pandacan oil depot, the Manila government’s legal, health, treasury, fire and engineering departments said they were convinced that the depot is safe and its operations are at par with international standards.
All supplies of liquefied petroleum gas were removed in the depot and replaced with diesel, to eliminate the threat of a possible explosion in the area since diesel does not explode.
A 15-meter buffer zone separating the depot from the residential community was installed. The oil companies in the depot also increased security safeguards jointly undertaken with the law enforcement and emergency response units.
What changed since then? Nothing. Except a new Manila mayor and a new administration.
The Pandacan oil depot still complies with strict international standards to guarantee the structural integrity of its containment facilities. It is still regularly inspected by the appropriate government agencies like the Department of Energy, the Department of Environment and Natural Resources, the Manila City Engineer’s Office and the Bureau of Fire Protection.
The Pandacan oil depot’s containment tanks and pipes are unlikely to burst or leak because their strength is ensured under the strictest of standards and maintained by highly skilled technical operators under the supervision and guidance of government regulators.
The Pandacan depot also has a secondary containment system. As required by international standards, each of its oil containers or tanks has bund walls that, in the unlikely event of a leak, will capture or contain whatever oil is spilled, much like a drip tray.
Again, there has been no major incident in the depot since it began operating 80 plus years ago.
But relocating it would, indeed, have major repercussions.
Relocating the oil depot outside Metro Manila would increase the risk of road accidents, product spills and pilferage.
Mandating oil companies to leave the depot may have an adverse impact on logistics and fuel costs which will trickle down to end consumers.
Besides, even with the depot’s closure, that land or area where it sits cannot be developed for commercial purposes by the city of Manila, simply because it is not theirs but belongs to the private sector.
Most of all, what signal do we send to investors and businesses if we keep changing ordinances and changing laws every time a new administration, be it local or national, is elected?
Certainly all the wrong ones regarding a stable regulatory environment.