Lopez Holdings


Opening remarks of Federico R. Lopez, Chairman and CEO of First Holdings Corporation and Chairman of OML Center, at the Experts Forum on Rebuilding Communities and Ecosystems After Yolanda
November 26, 2013
AIM Conference Center

Welcome and Acknowledgements. Many of you may ask why a power company like First Gen ended up creating a foundation like the Oscar M. Lopez Center For Climate Change Adaptation and Disaster Risk Management. Allow me a few minutes to share with you how it all began.

Around twenty years ago my father, Oscar Lopez, and I began building up First Gen Corporation, the power generating holding company of the Lopez Group. We initiated the use of combined cycle gas turbines in the country when we built our 1,500 Megawatt Sta. Rita and San Lorenzo power plants that were a cornerstone of the Philippine Natural Gas Project. Taken together, the latter was probably the largest single industrial undertaking in the country so far. Because of that effort, our country now enjoys natural gas --‐--‐ both a cleaner and lower carbon alternative in the Philippine energy mix.

After that, we acquired the country’s largest and the world’s second largest integrated geothermal energy producer, the Energy Development Corporation (or EDC) and a few of the National Power Corporation’s hydro power plants as well.

Today, we are proudly the power producer with the lowest carbon intensity measured in tons of carbon per kilowatt--‐hour. We continue to build on this platform by expanding our plants that use geothermal, hydropower and more natural gas. In fact, just last week, we broke ground on another 414 Megawatt natural gas fired power plant within our First Gen complex in Batangas. This is just the first in a series of badly needed capacity additions that will also eventually spearhead the entry of imported Liquefied Natural Gas or LNG into the country and give the Philippines an environmentally better alternative.

Pursuing this business model made a lot of sense for us and enables us to sleep better at nights. However, on some quiet nights you sometimes feel like you’ve gone too far ahead of the curve when you Page 2 of 6 OML Center Experts Forum on Rebuilding After Typhoon Yolanda 23 January 2014 see competitors building coal--‐fired plants all over the country because it’s the least difficult option to pursue. Of course, you even hear voices justifying that the Philippine emissions are so small that we’re merely just a rounding error in the concern for curbing carbon emissions globally.

I also remember the frustration I felt reading about the results of climate talks in Durban, South Africa back in December 2011 where the Washington Post described it ridiculously as “an agreement to begin a new round of talks on a new agreement in the years ahead.” and that “The Durban Platform…merely prods countries to come up with a new agreement that will go into effect no later than 2020.” Many described this ensuing period as a lost decade where inaction would hurtle us irreversibly towards a dangerous world that’s 3.5 degrees warmer instead of one that’s kept within a 2 degree change before the end of the century.

However, year after year we were already witnessing extreme weather events striking at the heart of our country and hitting millions of unsuspecting Filipinos with regularity. The litany of infamous storms in the last eight years are now too long to remember: Milenyo, Reming, Helen, Frank, Ondoy, Dante, Bebeng, Sendong, Pablo, even the nameless one we called Habagat, of course Yolanda, and most recently Agaton.

Much of our yearly experiences confirm the various reports from international agencies that the Philippines is among the top 10 most vulnerable countries in the world to the effects of climate change.

Events were telling us that our country’s ability to adapt to the new normal should be a top priority for all Filipinos.

One of our companies, geothermal producer EDC --‐--‐ which has an organizational footprint all over the country in the mountains of Luzon, Visayas and Mindanao --‐--‐ has already been feeling the more pronounced impact of extreme weather over the last few years from a combination of unusually high rainfall and geohazards. Landslide and weather related losses to our facilities and infrastructure were becoming more common such that between 1990 and 2013 we suffered close to Php 4.5 Billion in damages, including one incident that claimed the lives of fourteen construction workers. What’s alarming is that 86% of that figure was incurred only in the last eight Page 3 of 6 OML Center Experts Forum on Rebuilding After Typhoon Yolanda 23 January 2014 years! Of course the costs to repair the damage and lost revenues of our Leyte geothermal power plants from Yolanda are still not final but will surely run into Billions of Pesos as well.

But with every crisis comes an opportunity to learn and emerge stronger. Being a victim ourselves at the center of this and other storms means we can also be instrumental in finding solutions.

In response to all the landslides of the past, we systematically mapped all possible geohazard areas in our sites that could affect our people, assets and surrounding communities. Since 2006, we reinforced more than a hundred landslide prone areas with more than Php 855 Million of mitigating measures like rip--‐rapping, shot--‐ creteing, soil nailing, benching/terracing of slopes, installation of gabion walls and various drainage control measures; and where it was not possible to do these, we rerouted steam pipelines and other critical facilities out of harms way. Yet, despite these significant investments, the extreme weather continues to wreak havoc and cause damage.

With Yolanda last December, EDC had more than 700 employees who were themselves victims of the storm. But barely a few days after, when we found and accounted for the safety of every one of them and their families, they rapidly transformed into the backbone of our relief efforts not only in Kananga and Ormoc but all other devastated areas of the island as well.

Our heavy equipment, all fuelled up and ready before the storm, quickly cleared more than 15 kilometers of impassable roads between Kananga and Ormoc City. Within the first week, when it was apparent that transport logistics were the real bottleneck of relief efforts, we hired barges and aircraft to bring in a significant amount of food, gensets and diesel fuel to power up the Ormoc water district plus two of its hospitals and City Hall.

We also airlifted about eight tons of medicines and solar chargers/lamps and shipped tarpaulins, mosquito nets and vital relief goods, initially into Ormoc, but later via the Philphos port in Isabel, Leyte. This port later proved quite vital to our relief efforts but to get it working we had to transport several of our 60--‐160 ton capacity cranes there as well.

Our barges, trucks and aircraft mobilized more than 1,107 tons of relief goods that were either bought by us or secured through a working partnership with sister company ABS--‐CBN’s Sagip Kapamilya. We also transported more than 1,751 tons of DSWD relief goods from their National Relief Operations Center and Manila Port warehouse to the Isabel port in Leyte. We arranged for the goods to be repacked and assisted in its distribution to those most in need.

All told, we conservatively estimate that those efforts mobilized an estimated 10.7 million meals for over a million affected lives in the last two months since Yolanda hit. When I thanked our EDC employees at a solidarity mass we held in Leyte before Christmas last month, I reminded them that we will never forget that despite being Yolanda victims themselves, they managed to find creative ways to provide not only food but also hope to more than a million of our fellow Filipinos in Leyte just when they needed it most.

These experiences tell me that although being at the very heart of a storm is dangerous, it also provides an immense opportunity to learn and help others build their own resilience as we share that learning. There is general agreement that the Philippines should learn to adapt fast to the new normal. But what is the new normal? Can anyone say with certainty what to prepare for? Higher sea levels? How high? More rain? How much? Stronger winds? Droughts? Diseases? Threats to food or water supply? Some of these or all of these? How can anyone prepare and prioritize where to spend the limited resources we have given this amount of uncertainty? Are there best practices that are already in use elsewhere in the world?

What is certain is that millions of Filipinos will continue to suffer the brunt of devastation from climate change. To us, what is equally certain is that we stand a better chance of adapting if we can bring together both science and real world experience to bear on the new normal as it comes to clearer view.

And so, almost two years ago in August 2012 after separate discussions with friends like Climate Change Commission’s Secretary Lucille Sering, Fr. Jett Villarin of Ateneo, Toni Loyzaga of the Manila Observatory, Mahar Lagmay, Benny Pacheco and Fred Pascual of the University of the Philippines (UP) and Brother Ricky Laguda of De La Salle we signed a Memorandum of Understanding (MOU) with the Page 5 of 6 OML Center Experts Forum on Rebuilding After Typhoon Yolanda 23 January 2014 three charter partners (Ateneo De Manila, De La Salle University and the Ateneo de Manila University) and launched the OML Center for Climate Change Adaptation and Disaster Risk Management Foundation.

Our energy companies under First Gen and EDC committed Php 150 Million in seed funding and we subsequently engaged Dr. Rodel Lasco to head the center as its Scientific Director. For those of you that don’t know him, Dr. Rodel is one of the sixty eminent scientists that make up the prestigious National Academy of Science and Technology or NAST. He also happens to be on the Intergovernmental Panel on Climate Change who along with other scientists around the world shared the Nobel Peace Prize with Al Gore in 2007 for their work in bringing climate change to global attention.

The vision behind the center is to create an open source for learning and collaboration so that we adapt at the shortest possible time and mitigate impact to the greatest extent possible. The center is funding research, studies, fora and conferences such as this that encourage a lively exchange of ideas among the country’s best minds and the world’s recognized experts to help all of us better understand and prepare for this new world of extreme weather and other calamities such as earthquakes and even volcanic eruptions that result from our being in the Pacific Ring of Fire. We want the OML Center to be a catalyst that will enable and encourage collaboration among a diverse range of specialists such that it serves as a platform for collaboration and an open source for sharing better practices and learning.

The center was off to a modest but solid start and last year we released our first round of research grants to a diverse set of projects that ranged from impact and risk analysis on food and environment security in Tarlac; to an integrated analysis on risks to climate change and disasters in Iloilo, Davao City and Davao Oriental; to even one on a design for car flotation systems.

But the idea for today’s forum came as EDC President Ricky Tantoco and I were driving around Kananga, Ormoc and Tacloban after Yolanda where we were struck by the amount of rebuilding that has to happen just to bring peoples’ lives back to where they were before. We also just met with a team from Desafio Levantemos Chile who Page 6 of 6 OML Center Experts Forum on Rebuilding After Typhoon Yolanda 23 January 2014 lived amongst the Leyteños for ten days courtesy of Ambassador Roberto Mayorga. Desafio Chile is their third largest foundation and one of those responsible for getting Chileans to “bring down their fears, rebuild and dream again” after the devastating 8.8 magnitude earthquake in 2010.

The one message their team kept repeating to us during their stay was “please seize this as an opportunity to rebuild better than before.” It will all be worth it.

We all know that we must rebuild lives and bring back normalcy as quickly as possible and we will all be tempted to go for speed and just restore what was there pre--‐Yolanda. But for Ricky and I and many of you committing time and resources to the reconstruction effort, the question in our minds is how do we rebuild “better than before?”

So I’m glad, with all your support, we have been able to pull together such a forum today in the early stages just as the long and arduous road to reconstruction is about to begin. I am hopeful that with the talent gathered here today collaborating, we will make choices that will result in a more resilient Filipino people.

Let me just say that on behalf of my father and all of us at the OML Center, we’re quite touched by the overwhelming response we received from all of you especially those who flew over with such short notice to listen, participate and share your ideas, expertise and experiences with everyone today. It’s precisely this kind of selflessness and collaboration we will all need to tackle some of the biggest challenges yet to come.

Thank you very much and I wish us all the best today.  

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Lopez Holdings Corporation 
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