Economy 2 MIN READ

Philippine business groups flag security risks in energy deals with president’s ally

November 10, 2021By Reuters

Business groups in the Philippines spoke out on Wednesday over the sale of a combined 90% stake in the country’s only gas-to-power project to a firm run by an ally of President Rodrigo Duterte, warning it could pose an energy security risk.

The groups, which included the prominent Makati Business Club, urged the Senate and other agencies to “continue to investigate, speak, and act” over transactions that gave conglomerate Udenna Corp control of the Malampaya natural gas assets, despite the firm having no track record in the sector.

Udenna is run by Dennis Uy, a hometown associate of Duterte and the biggest donor to his 2016 election campaign. His business empire has expanded dramatically during Duterte’s presidency, but Udenna insists it has received no preferential treatment.

It bought Chevron’s 45% share in Malampaya in late 2019, a deal valued at $565 million and in May acquired Shell’s 45% stake in the project.

The Senate energy committee should ask the government why it did not exercise its right of first refusal over Chevron’s and Shell’s shares, the groups said in a joint statement.

The government “may have given up tens of billions of pesos” it said, “and more importantly has put the country’s energy and national security at risk.”

They also urged investigators to scrutinise the government’s justification “for allowing the sale of a critical energy asset to a group with, at the time of the bid, no experience or track record in gas exploration or production”.

Udenna was preparing a statement, spokesman Raymond Zorrilla said on Wednesday. It last week said the Malampaya transactions underwent strict bidding processes and due diligence, and did not require government approval.

Senate energy committee chairman Win Gatchalian had earlier concluded that the Department of Energy’s approval of the Udenna-Chevron deal in particular was “defective and invalid”, and has questioned its legality.

His comments followed the filing last month of a graft complaint against DOE officials, alleging misconduct and preferential treatment for Udenna, which it rejects.

The DOE said Chevron and Shell followed “rigorous global standards” when they sold their Malampaya stakes.

(Reporting by Enrico Dela Cruz; Editing by Martin Petty)


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