ARE we making multibillion-dollar-purchase decisions, with multibillion-dollar yearly costs, with preferential decisions for parties that cost two to four times more?
Rail
Why should the United States be the one to choose consultants for rail when they are far behind in technology, execution and operational experience?
World Bank studies have estimated that China can deliver a rail network cheaper and faster than any other country today, and the costs are about half of Japan’s. Most analyses say China’s costs are even less than half of the US’. Japan still has excellent technology, while the US is over a decade behind.
Over a dozen countries, including Vietnam, Laos, and Indonesia, as well as some Western, African and South American nations, have contracted China to build or rehabilitate their rail systems. These were mostly delivered in a reasonable time, while other suppliers — from major countries — have mostly failed. Sometimes, they delivered over a decade late. We shall not spend time on this, since many of our countrymen have visited China lately and experienced the obvious success, comfort and advanced level of its rail technology. The costs are published and can be compared to the bids for the projects of different countries.
Nuclear
Why should the Philippines consider with preference US nuclear power plants when they cost nearly thrice as much, take much longer to deliver, and are technologically already shown to still be problematic? This assures us that due to US pressure geopolitically, we will have no chance to be competitive in power costs, which is one of the three biggest reasons the Philippines is not competitive as a production base. (The other two? Corruption and relatively low educational attainment.)
Aligned with the Department of Foreign Affairs’ (DFA) policy direction, the Manila Electric Co. is evaluating primarily US-designed small modular nuclear (SMR) reactors for potential commercial deployment, which is supported by the US Trade and Development Agency. The Philippines has signed a civil nuclear agreement to bring US reactor technology into the country. What expertise was used, what alternatives have been considered? Is the politics worth billions of dollars more? Even France and South Korea have had much more recent experience in building and selling than the US, although not SMRs. How do all of them compare? Who are the experts assessing our infrastructure and nuclear decisions? Have these Philippine analysts made major proven successful decisions and executions based on data, and not public relations and media alone?
Note that the US has not constructed successfully running SMRs as of today. Russia was the first to have one: the Lomonosov. China also has one — the HTR-PM, running since 2023 — and is about to operationalize the second one and is readying it for export.
Even with a territorial dispute, the level of the DFA’s animosity toward anything from China exceeds even that of the US and its allies. Even India and Japan use billions of dollars of Chinese products. Even US artificial intelligence (AI) startups use Chinese AI apps and platforms, just as China also uses US technology. What is the framework the DFA is applying for its constant and public putdown of any relations, even describing assistance that the Philippines itself requested as deceiving, and social activities as pretended, when the US hardly assisted in calamities despite it being declared as the basis for allowing US bases. Even China allows its people to enjoy US entertainers and celebrities. These hostilities and corruption have massively reduced aid to our country in all categories.
The US’ NuScale and others, subsidized by the US government, failed even after billions of dollars in subsidies. Even Westinghouse’s Vogtle plants 3 and 4 have had billions in overruns. Microsoft, Google, and Amazon are now investing in the nuclear industry, but none have an operating model right now.
China has 50 nuclear plants now and plans to build 150 more in the next decade. It builds several plants a year with standardized protocols, schedules and parts, and has a whole, well-oiled supply chain. The US currently has over 90, but has not built a successful one in about 20 years. Where would the Philippines ask for parts, and what would they cost, given the isolated production?
China’s estimated capital costs were roughly $4,500 to $6,000 per kilowatt-hour (kWh) for first-of-a-kind units. This amount would drop significantly as more are produced. Its power generation cost is estimated at 5 to 8 cents/kwh. NuScale’s estimates exceeded $20,000/kW just before cancellation, with the power generation cost estimated at 9 to 15 cents/kwh. These proportionate differences are aligned with various infrastructure project estimates by assessing bodies, including large multilateral institutions.
We should actually study if we are better off with SMRs or larger, conventional nuclear plants that have lower generation costs but take longer to build, when we are already on the verge of shortages of energy, entering the age of AI.
China is at the forefront of nuclear and various power technologies; it’s the only country with an operational thorium plant. Thorium has large advantages in cost, safety and availability. Uranium is becoming more expensive and harder, and more restrictive to source.
Artificial suns are also in the experimental stage in several countries, with China having the longest period of demonstrated live burn. Other technologies also have China in the tech lead, not to mention batteries, transmission, and related industries.
Today’s technology and economics are all about successful integration, achieving both higher capacities and efficiencies, fewer defects, and lesser repairs and maintenance.
The Philippines should study each project with objectivity and use expert competence pools, not individuals or companies that might be easily influenced and pressured. We cannot base such important decisions of such scale on capital and operations costs, rail or nuclear plants, on parties without safeguards. Who are the consultants being used? Do they just have academic and career credentials, or do they have judgment that achieved better-than-average implemented efficiencies? Are they politicized in their decisions more than they use economics? Groups can decide on uneconomic models and just pass on the costs to consumers and businesses, and make the country fall behind even farther. There are also considerations of adaptability to future tech trends, safety and maintenance, although politics is also a consideration.
The Philippines was once behind Japan. Then it fell behind Taiwan, then South Korea, then Thailand. It’s now falling behind Vietnam. Are Laos and Cambodia also going to leave us behind?
We need to bring the best competence pools known for integrity and probity into decision councils, instead of relying only on lawyers, politicians, and parties that can easily be compromised or arm-twisted without public transparency. We need not only individuals but also groups with a track record of managing well outside of exclusivist, protected industry experience. We need a critical mass of people who both love the country and know intelligent, integrated and wholistic decision-making. We need different sectors to come together and help make the difficult decisions and sustained work needed to uplift our countrymen.
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