Carpio: Chinese ‘control’ of national power grid a cause for concern

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Metro Manila (CNN Philippines, November 26) — Retired Supreme Court Associate Justice Antonio Carpio echoed sentiments of senators on China’s co-ownership of the power grid operator, calling it a cause for concern.

“It should be a cause for concern especially if the technicians who are manning or maintaining the grid the power lines are Chinese because if the Chinese are the ones maintaining our national grid, it’s easy for them to shut it down and they can always inject malware or software,” Carpio told reporters Tuesday.

The National Grid Corporation of the Philippines (NGCP) consortium, which operates the power transmission system, is comprised of the Monte Oro Grid Resources Corp. led by Henry Sy, Jr., Calaca High Power Corporation led by Robert Coyiuto, Jr., and the State Grid Corporation of China (SGCC). The Chinese company is a technical partner and holds a 40-percent stake in NGCP.

The NGCP, however, told CNN Philippines in a statement that SGCC’s role is limited to that of an investor, with board seats corresponding to its stake in the company. It added that it was necessary to include a foreign technical partner in the consortium that operates it.

“The day to day operations of NGCP are 100% handled by Filipinos, and the company’s business direction is, like any other corporation, steered by its Board of Directors,” the NGCP said.

It added that it is focused on ensuring the safety, reliability and stability of the national power grid at all times.

The NGCP’s statement belies a CNN International report which said that the Philippine power grid is under the full control of the Chinese government and could be shut off in time of conflict.

Citing an internal report prepared for lawmakers by a government body, CNN reported that the grid was currently "under the full control" of the Chinese government, which has the "full capability to disrupt national power systems."

"Our national security is completely compromised due to the control and proprietary access given by the local consortium partner to the Chinese government," the report warned, CNN said.

In a statement, China's Ministry of Foreign Affairs said "China's State Grid Corporation participates in projects run by the National Grid Corporation of the Philippines as a partner of local companies."

"The Philippines is a neighbor and important partner of China's. We support Chinese companies conducting business in the Philippines in accordance with laws and regulations to expand mutual benefits and win-win cooperation," the statement added. "We hope certain individuals in the Philippines view such bilateral cooperation with an open mind as well as an objective and fair attitude. They shouldn't over-worry or even fabricate things out of thin air."

‘With a single switch’

During a plenary session on the 2020 budget of the Defense department two weeks ago, Senate President Pro Tempore Ralph Recto warned of serious repercussions in China's co-ownership of NGCP.

Recto said the SGCC may be more than a minority foreign owner.

"Right now ang buong kuryente ng Pilipinas ang nagpapatakbo the state grid of China," Recto said two weeks ago during a plenary session on the 2020 budget of the Defense department.

[Translation: Right now Philippine electricity is operated by the state grid of China.]

Senator Panfilo "Ping" Lacson added, "In fact, I heard that the equipment that arrived in Chinese character na and they are manned by Chinese personnel."

Recto pointed out that the Chinese can "turn it off remotely," posing dangers to the country in case of a war.

"Ang giyera naman na darating ganoon na eh [Future wars will be like that,] not necessarily missiles. Cyberwar. And what is that? Telecommunications," Recto said.

In another Senate hearing last week, Senate energy committee chairperson Sherwin “Win” Gatchalian, said that electricity could potentially be shut off remotely, or by foreign actors.

Gatchalian, citing the National Transmission Corporation which owns the power grid but does not operate it, said they have studied the possibility of power being shut off remotely or by foreign actors.

"With a single switch, no electricity would be transmitted to any of our homes, our businesses, [or] any of our military facilities," he said, without referencing China explicitly.

In such an instance, it would take between 24 and 48 hours to get the grid back up and running, he added.

Opposition Senator Risa Hontiveros said China's co-ownership of the NGCP brought with it "serious national security concern given China's recent behavior and hegemonic aspirations."

"As long as the system operations are controlled and managed by Chinese engineers (they have) an enormous power" over the country's energy supply, said Hontiveros. "This would pose a great risk to public infrastructure and national security."

Gatchalian said he shared Hontiveros' concerns and promised the government would improve supervision and monitoring of the power grid to ensure control "remains in the hands of Filipinos."

"The [grid] is probably one of the most vital facilities in our country," said Gatchalian.

Hontiveros has filed a resolution calling for a Senate probe on the national security implications of Chinese ownership and control of the national power grid.

Chinese controlled

The NGCP handles the transmission of electricity across the Philippines, linking power plants and consumers throughout the country, supplying almost 78% of households in the country of over 105 million, according to the internal report.

The grid operation was privatized in 2009, with China's state Grid Corporation taking a major stake, as well as providing staff to help run the systems in the Philippines. Government-owned National Tranmission Corporation still owns the grid's assets.

According to the report provided to CNN, the technology upon which the grid is based has increasingly been switched over to Huawei products, which the report claims are "completely proprietary" and can only be operated by Chinese engineers. During the Senate debate, Gatchalian acknowledged that Chinese engineers had control over certain systems and that some manuals were only provided in Chinese, against regulations.

In particular, the report warns the Supervisory Control and Data Acquisition (SCADA) system used to monitor substations, transformers and other electrical assets is completely dependent on Huawei technology. "None of the local engineers are train(ed) nor certified to operate the system," the report said.

In a statement to CNN, Huawei said the claims in the report do "not reflect the facts."

"Huawei has never provided any equipment for NGCP's control systems," a spokeswoman said. "As a leading global ICT solutions provider, Huawei has always strictly complied with all applicable laws and regulations of the countries where it operates. Huawei is committed to providing secure and reliable products and services to each of its customers."

The company has been dogged this year by accusations that it poses a national security risk, with Washington largely blocking it from expanding 5G offerings in the US and pushing allies to do the same. Huawei has consistently said that it is a private company and does not give the Chinese government any access to or control over its technology.

Other systems within the Philippine national grid were also provided and largely operated by Chinese companies, the internal report said, including submarine cables linking power stations across islands, and key control apparatus, some of which are operated by engineers in China over the internet.

It described the system as "operated by foreign nationals (Chinese) at critical access levels," adding that "critical system operations are all under the control of foreign nationals -- locally and offshore."

The report urged lawmakers to return control and oversight of the key power systems to the Philippine government.

President Rodrigo Duterte has repeatedly said he could not go to war with China over the South China Sea dispute. Beijing claims almost the entire global waterway, despite the arbitral ruling recognizing Manila's sovereign rights in some areas within its 200-nautical mile exclusive economic zone that are being contested by China.

The Duterte administration has been criticized for nurturing friendly ties with China and entering into partnerships despite the risk of compromising national security.

Recto has urged defense and security officials to look at these issues holistically, pointing out Chinese companies' involvement in other projects, including the security camera deal with the Department of Interior and Local Government and the agreement to build communications equipment in military camps. Lacson said the Defense department has committed to look into Recto's concerns.

The military and China Telecom-backed Dito Telecommunity, have assured that their deal will not jeopardize the country's security, as both sides claim protocols are in place to protect the country's communications. Malacañang likewise said the government will not allow any information leak from the China-funded camera surveillance project.

CNN Philippines’ Tristan Nodalo and Eimor Santos, and CNN’s James Griffiths contributed to this report.