Lopez Holdings


Remarks of Federico R. Lopez, president and CEO of First Gen Corporation and concurrent chairman and CEO of First Philippine Holdings Corporation at the First Partnerships for Disaster and Climate Resilience Forum
July 10, 2014
Manila Polo Club

Many Business Continuity Planning specialists like to quote the saying that “it wasn’t raining when Noah built the Ark”. Even if the saying brings to mind an image of a determined visionary like him preparing for the Great Flood, the everyday side of me also imagines the kind of ridicule and resistance someone like him endures when planning for some cataclysmic event that may or may not happen. I can imagine him trying to convince his wife that the children’s milk money be reallocated instead on 40 days and 40 nights’ of animal feed.

Or maybe some of you have seen the National Geographic series on cable TV called Doomsday Preppers which treats disaster preparedness in a tongue-in‐cheek kind of way as we see real life examples of a few American families preparing for the long overdue eruption of Yellowstone National Park Volcano, the total collapse of the international financial system, or an Electro Magnetic Pulse attack by a foreign power.

The hard truth is that BCP requires an allocation of scarce resources and a mindset that calculates the probability of what you’re preparing for. There will always be an effort to balance cost and probabilities and the influence of that mindset will certainly ebb and flow with events. I’m sure we all remember the frantic preparations in the run‐up to Y2K and the relative disinterest in BCP after the big bang never happened. But I’m sure you also recall our world changing post‐9/11 in 2001 and how preparedness again loomed large as a buzzword.

In a world of climate‐related disasters however, the Philippine experience is quite different. More than 20 typhoons hit our country every year. This has been the case for decades but what’s alarming is how they are intensifying not only in wind strength but also, in some cases, the amount of rainfall as well. The effects of these weather events are already being felt in every aspect of our lives.

Last November, our company Energy Development Corporation (EDC), the largest geothermal producer in the world today, was one of those companies physically at the center of the most powerful typhoon ever to hit land in recorded history. There were many lessons we learned about such an event. In the next 20 minutes let me share some of them with you.

When news broke last November of the imminent arrival of a monster typhoon headed straight for what was home to more than 60% of our geothermal capacity, like any other threatened company we took all precautions and battened down the hatches.

• All power plants were placed on “RED ALERT”.
• Work was suspended for non‐critical personnel.
• a “Skeletal crew” remained on site, with 3‐4 days worth of food/supplies.
• Travel to and from sites was cancelled.
• Site personnel stocked up on fuel and prepared critical spare parts.
• Identified landslide‐prone areas were designated “off limits” and monitored closely.
• All gates, doors, and windows were reinforced.
• Heavy equipment activities were suspended and all bulldozers, dump trucks, payloaders, backhoes and cranes were all fuelled up and stationed at strategic locations ready to commence road clearing once the storm passed.

In the immediate hours after the storm’s passage we heard nothing from any one in Leyte. We had no idea that all telecommunications on the island had been knocked out. The radio silence was deafening.

Presuming the worst had happened, a rescue team bringing water and limited supplies was organized to motor from our EDC plant in Sorsogon to make the sea crossing to Leyte and locate our employees there. Fortunately in just a few days our rescue teams accounted for all 743 of our employees, assessed their needs and quickly mobilized relief, emergency supplies and cash for them immediately.

All our heavy equipment stationed on site were immediately mobilized once the storm passed to clear fallen trees, posts and debris on more than 15 kilometers of roads between Kananga and Ormoc City paving the way for movement of people, supplies and relief goods within that vital corridor.

What inspires me the most however is that many of those same employees, despite being victims, and still without complete roofs over their heads, immediately bounced back to become the backbone of dramatic relief efforts on the island.

Under the leadership of no less than EDC President Ricky Tantoco we formed a Crisis Committee with 20 top officers of the company from every discipline to coordinate every facet of company operations and relief during this critical period, working very closely with the local government units of Kananga and Ormoc City on identifying critical needs.

Five gensets and more than 22,435 liters of fuel were brought in to power two hospitals, the municipal halls of Ormoc and Kananga, and the water district facilities of Ormoc, restoring water service to more than 80% of the city. We also mobilized and hired jet aircraft, heavy-¬‐ lift helicopters and a handful of the largest capacity landing barges in the country in what was probably the most extensive logistical relief and rescue effort ever mounted by a private sector entity.

Our logistical backbone mobilized relief goods, supplies (tarps, tents, mosquito nets blankets, insect repellent, candles, aquatabs, solar lights and chargers) and medical assistance from EDC, ABS‐CBN’s Sagip Kapamilya, and DSWD that would ultimately provide more than 10.7 million meals to more than a million affected lives in the weeks immediately following the storm.

But more than sheer numbers, I like to tell our people that our group’s ability to have mobilized a well‐oiled logistical operation in the air, at sea and on the ground in the early days after Typhoon Haiyan was priceless and provided hope to a devastated community precisely when they so needed it most.

In retrospect, I believe these early actions were absolutely critical in giving locals confidence that their LGU’s were working and in control, preventing what could easily have been a downward spiral into chaos and desperation.

But in the aftermath of something so terrible and devastating as Typhoon Haiyan, even when survival needs are overwhelming, it’s just as important to warm people’s hearts, inspire and get them dreaming again. To do this we organized a surprise concert led by Filipino artists like Gary Valenciano, Eric Santos and others for 10,000 people at the still devastated Ormoc Superdome a week before Christmas. I will never forget how moved I was that day just seeing the people of Ormoc and Kananga touched, laughing again, even for just an hour, like Yolanda never happened.

Of course, behind the high drama of rescue and relief efforts, management and employees at EDC quietly and completely restored 530 MW of available capacity in our Leyte geothermal plants with the help of a massive worldwide procurement for necessary spares and three chartered 747 flights from Houston to Cebu to bring it all in. All this, completed five months earlier than scheduled.

However, although it was essential to get our plants up and running in as short a time as possible, it is also just as necessary to reconstruct our facilities to a much higher standard for the more frequent new normal weather events we are experiencing. We were already doing this prior to Haiyan as between 1990 and 2013 we suffered close to Php 4.5 Billion in damages, with 86% of that figure incurred just within the last eight years!

In response we systematically mapped all possible geohazard areas in our sites that could affect our people, assets and surrounding communities. And since 2006, we reinforced more than a hundred landslide prone areas with more than Php 855 million of mitigating measures such as rip‐rapping, shot creting, soil nailing benching/terracing of slopes, gabion walls and various drainage control measures.

Where it was not possible to do these, we rerouted steam pipelines and other critical facilities out of harms way and we now use higher flood level elevations for steam pipeline river crossings. Today, we also maintain a higher level of spare pipes for sections of our steam pipelines that may be exposed to relatively risky slopes.

When Haiyan’s powerful winds hit our plants, most of the damage unsurprisingly occurred with cooling towers which by their very nature are designed to capture maximum wind. Thus, building back a better cooling tower was a challenge. However, we have since then reinforced the structures, used more aerodynamic and low profile designs where possible and now carry a larger amount of fleet-¬‐wide spares sufficient to restore two towers should the need arise.

As for our buildings,

• they now have roof trusses and purlins that have been redesigned for 300 kph wind speeds;
• we’ve reduced the area and number of glass windows and now also use thicker glass;
• all roll‐up doors have intermediate vertical and horizontal supports using thicker gauge steel as well;
• where possible our control rooms use concrete slab designs;
• and we have considerably reduced area openings in powerhouse structures.

Of course, communications infrastructure is vital to business continuity and indispensable especially in a crisis. With the ubiquity of cellular phones today, we tend to take this for granted. But this proved to be a major weakness in the last storm and will likely be so in the future unless you plan for robust alternatives.

The day after Yolanda devastated Leyte, we immediately saw the need to restore communications at our Leyte sites to enable our rescue, rehabilitation and relief efforts. We prioritized enabling voice communications capability through satellite phones and setting up emergency 2‐way analog UHF/VHF radios. Two weeks later, we restored data communications by setting up VSAT radio systems and creatively re‐routing our Telco links via emergency microwave radio communications. We also augmented the cell signals from Globe and Smart through a network of signal boosters. In the span of barely a month, our sites had both voice and data capability that proved critical in successfully performing rescue, rehabilitation and relief operations.

Moving forward:

1. We will equip each of our power plant sites with a Broadband Global Area Network (BGAN). This is a self panning, global satellite internet network which will enable both data and voice communications on a pay‐per‐use basis in a backpack.
2. We will equip key officers and personnel with a Sat Sleeve that will enable their smartphones to communicate using Satellite communications in lieu of cellular networks.
3. We are converting our analog 2‐way radio systems to digital, which will enable wider and more secure coverage.
4. Lastly, we are currently designing a command center capability that will enable us to monitor and control our crisis response within and amongst our group of companies in the future.

Moving outside our company gates, we believe it is just as essential for us to help surrounding communities get back on their feet by rebuilding the structures that support their lives. Here too in all these efforts is the rallying cry to help them “build back better”. With the collaboration of top tier experts such as Boy Sy for building structural integrity, and two architectural firms of Willy Coscolluela and Carmelo Casas, we have come up with a schoolhouse design that meets the newly issued DPWH guidelines with a prescribed wind load of 250 kph.

We estimate that each classroom will cost Php 1.2 Million. With donor funds coming from ABS‐CBN Sagip Kapamilya, EDC is managing the construction of 64 classrooms in Leyte for 2014. Four of these pilot schools have begun construction last March 11th but are slightly delayed for completion by end July.

Beyond schools, we knew it was even more important to help them rebuild their source of livelihood. However, we felt this disruption in their lives could be a golden opportunity to give them new skills that could place them on a better trajectory than they were before the storm. With that thought, we rebuilt KEITECH ‐ the storm‐damaged vocational school we established in 2009 in partnership with the local government of Kananga. Except today we’ve reoriented it to train and certify the family breadwinners in Carpentry, Plumbing, Electrical Installation, and Maintenance. Skills that will be in demand as the rebuilding of Leyte gathers more steam. In the span of just three months they will each graduate with an NC II certification that will make them more employable. While undergoing their training, they will all be housed and fed in the KEITECH facility. We started training in the rebuilt facilities in April 21st of this year and by June 2016 we will have trained 9 batches of 120 each or a total of 1,080 beneficiaries.

With strong managerial capability on the ground in Leyte because of our physical presence there and excellent working relationships with the local governments, EDC is actually in a strong position to ensure that rescue, relief and now rehabilitation works get done in a timely and cost effective manner. In fact, I’ve told our people that we should even be open to implementing and monitoring projects for other donors should they wish to contribute to rebuilding efforts in Kananga, Ormoc City and District 2 of Leyte. It’s such a massive job that we surely cannot do it alone.

Part of adapting to the new normal is recognizing that natural disasters such as Typhoon Haiyan in varying degrees will be a fact of life moving into the future. We have thus brought into EDC one of the country’s most experienced experts in the field of Disaster Response and Preparedness – Dr. Ted Esguerra.

Doc Ted, as we fondly call him, was formerly with the Philippine Coast Guard and was the medical doctor for the Philippine Team that scaled Mount Everest. He is always among the first boots on the ground every time a disaster strikes anywhere in the country. He and other highly trained and motivated rescue professionals are always on hand to help and guide the most dangerous and complicated missions. I’ve tasked him with building up our own disaster and response teams throughout our power plant sites scattered around the country. We will utilize full time rescue and preparedness professionals as well as trained volunteers he calls force multipliers. This is in recognition of what we’ve observed that people in affected locales are usually not able to respond to their own emergencies and require skilled and well‐equipped assistance from outside. We are funding him to likewise train and build alliances with local governments and NGO’s in disaster preparedness and emergency response throughout our plant sites in Luzon, Visayas and Mindanao which will correspondingly enhance our country’s preparedness as well as its network of skilled first responders in times of disasters.

Most Business Continuity Planning will traditionally focus on the company and its operations. Our experience being in the eye of the storm and seeing its effects on lives and the community did not fail to leave its imprint on everyone in EDC. We recognize that we’re part of that community and they a part of us. Beyond numbers and statistics, you cannot ignore the real humanitarian costs of a disaster and the fact that the majority of Filipinos are not ready to face such disasters already happening each year. When many ask us why we did what we did, I just have one answer: it was but human to do so.

In closing let me say that BCP means preparing for the worst. But when you think of all that can happen in today’s world you also recognize that no one can go it alone. Collaboration and partnerships with others will be fundamental in preparing for disasters and building resiliency in today’s new normal world. In this respect, I’d like to thank the Carlos P. Romulo Foundation, the Zuellig Family Foundation and the Manila Observatory for organizing this event. You’re on the right track and do count on us if we can help each other through this journey towards climate and disaster resiliency for our country.

Thank you very much and good morning!

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Lopez Holdings Corporation 
16/F North Tower, Rockwell Business Center Sheridan, Sheridan St. corner United St., 1550 Bgy. Highway Hills, Mandaluyong City, Philippines

  • Trunkline: (632) 8878 0000
  • Fax: (632) 8878 0000 ext 2009