CONCERNS ON FOREIGN CONTROL OF PHL POWER GRIDS LINGER

By Philip M. Lustre Jr.

SIX months after the controversy that China could unilaterally shut off power supply in the entire Philippines went public, the fear of foreign control of its power grids linger. No amount of firefighting by Chinese and Filipino officials could dissipate fear of foreign control of its power supply, which passes through the grid system of the state-owned National Grid Corporation of the Philippines (NGCP). Their explanations have become voices in the wildernesses; they were hardly taken seriously.

Fears over China possessing remote control over the country’s national power grid runs parallel now to that of the U.S.’s, as President Donald Trump has moved to secure its power grid from foreign attacks. Bloomberg’s Ari Natter and Stephen Cunningham said Trump’s intention is to “secure the nation’s electricity system from foreign adversaries.”

Trump has ordered a block on U.S. purchases of certain power system equipment from entities deemed risky to national security. Among the now restricted foreign-produced equipment are transformers, capacitors and metering equipment used in power transmission.

Meanwhile, a group of U.S. senators have called the Trump administration to protect power system from Huawei Technologies Co., Chinese producer of solar panels, energy storage technology and telecommunications infrastructure. Huawei could put the grid at risk of foreign surveillance. On another front, the Trump administration has banned Huawei and other Chinese firms like China Telecom from the U.S. telecommunications industry.

In late 2019, CNN had obtained a report for local lawmakers, claiming Chinese engineers had access to "key elements of the system, and that power could in theory be deactivated remotely on Beijing's orders." The report, prepared by an unnamed state agency, warned the Philippines' national security was "completely compromised" due to the control and proprietary access given by the local consortium partner to the Chinese government.

China, through the State Grid Corporation of China (SGCC), owns 40% of the NGCP. China has acquired this after a franchise was awarded to the SGCC in 2008 under former president Gloria Macapagal Arroyo, who was described by experts to be more "receptive" towards China than her successor, Benigno Aquino III. The NGCP is the nation's only transmission service tasked with operating its power grid where electricity flows from generating plants to distribution utilities and businesses and household nationwide.

Aside from SGCC, the NGCP consortium is composed of the Henry Sy, Jr-led Monte Oro Grid Resources Corporation and Robert Coyiuto, Jr-led Calaca High Power Corporation. The consortium started operations as power transmission service provider in 2009 and holds a 25-year concession contract and 50-year franchise to operate the power transmission network.

Appearing in the pivotal Nov. 26, 2019 Senate public hearing, Energy Secretary Alfonso Cusi and National Transmission Corporation (Transco) President Melvin Matibag admitted that “China could possibly disable the transmission network which is responsible for the delivery of

electricity across the country.” China’s control of the NGCP is assured with its chair, SGCC’s Zhu Guangchao as its and Wen Bo as its chief technical officer. Henry T. Sy, Jr. sits as NGCP vice chair, while Anthony Almeda is president.

Sen. Sherwin Gatchalian, committee on energy chair, has filed a “resolution to scrutinize the compliance of the NGCP on its mandate to safeguard the grid and ensure continuous electricity supply in the country.” His committee had conducted public hearings, but a committee report has yet to be prepared and issued.

SGCC’s control of the Philippines power grid and China Telecom’s grip on Dito Telecommunity, the third telco after the PLDT Group and Globe Telecom, have similarities. China’s control over NGCP and Dito Telecom are threats to Philippine security and sovereignty.

Moreover, if NGCP’s power transmission operations are SGCC-controlled from network processes to the Supervisory Control and Data Acquisition (SCADA), facility planning and systems integration all the way to grid security, the same is true with the China Telecom’s control with Dito Telecom over the country’s third telecommunications franchise.

Press reports said China Telecom has its operating manuals written in Chinese characters to the disadvantage of Filipino technicians. ChinaTel and Dito’s memorandums of agreements (MOAs) with the Armed Forces of the Philippines to set up facilities within military camps violate the Filipinos’ rights, particularly on privacy of data.

A cybersecurity threat comes from concerns on the possibility of Chinese hackers stealing SMS: US-based cybersecurity vendor Fire Eye said that one of China’s prolific hacking groups has developed a new malware that can compromise cellular networks by monitoring and saving SMS traffic from specific phone number.

The unresolved dispute between the Philippines and China over the West Philippine Sea opens up the country to espionage. Several years back, Kasper-sky Labs reported that a Chinese-speaking hacker group called Naikon had successfully infiltrated governments around the South China Sea region especially the Philippines. #