Local business groups urged the Senate to get to the bottom of why the government did not exert its right over the Malampaya gas project, when Davao businessman Dennis A. Uy, a campaign donor of President Duterte, bought a controlling stake in the critical energy asset despite having no prior experience in gas exploration.
Eight local business groups, including the Makati Business Club, urged the Senate and other concerned stakeholders to know why the government did not exercise its right of first refusal, which would have allowed it to match the offer of an interested buyer and thus keep control of the asset.
“By failing to do so, the government may have given up tens of billions of pesos at a time when the government needs money more than ever and more importantly has put the country’s energy and national security at risk,” the groups said.
Uy’s Udenna Corp. completed its purchase of Chevron Malampaya LLC’s 45-percent stake in March last year. It increased its stake to 90 percent this year when Shell Philippines Exploration B.V. decided to exit the gas field in a $460-million deal.
State-owned Philippine National Oil Company-Exploration Corp. holds the remaining 10 percent.
While some say the Malampaya field, which feeds natural gas to major power plants in the country, will soon dry up, its location is crucial to the country’s hold over the West Philippine Sea.
The business groups did not name Uy or his company in the statement, referring to them only as either the “private purchaser” or “a group with, at the time of the bid, no experience or track record in gas exploration or production.”
Guaranteed revenue stream
They took note of the government’s reservations in shelling out money at a difficult time to pay for the shares but “it knows these will be offset by future revenue.”
“We urge the Senate and concerned agencies and groups to fully explore if the government could easily get financing for such a purchase, as was done by the private purchaser, given Malampaya’s stable and highly guaranteed revenue stream,” they said.
They also said the authorities should find out why the government failed to extend the consortium’s service contract over Malampaya in 2019.
“From an energy security standpoint, the delay may be a breach of fiduciary duty given that the existing wells are expected to be depleted by 2025, and the estimated five years needed to explore and develop additional wells,” they said.
The other signatories in the statement are: Energy Lawyers Association of the Philippines, Financial Executives Institute of the Philippines, Filipina CEO Circle, Integrity Initiative Inc., Investment Houses Association of the Philippines, Philippine Women’s Economic Network and Women’s Business Council Philippines.