‘We should cry for the Filipino people’: Lawyer urges vigilance amid Udenna acquisition of Malampaya

Benise Balaoing, ABS-CBN News

Posted at Nov 19 2021 02:02 PM | Updated as of Nov 19 2021 02:09 PM

Malampaya gas project. Shell Philippines Exploration BV, Handout
Malampaya gas project. Shell Philippines Exploration BV, Handout

MANILA – Filipinos should be vigilant about the developments in Udenna Corporation’s acquisition of 90 percent of the Malampaya gas project, a lawyer said.

“The Filipino people should be vigilant about this. It is, as I mentioned, several times this is of national interest. This is for the future generations of Filipinos,” said Atty. Rico Domingo, president of the Philippine Bar Association.

“We should cry for the Filipino people. We should cry for the future generations. Mga apo mo, Mike. Mga anak mo, Nikki. Mga apo mo. Ito ay dapat nating gawing bagay that we should monitor this. And we cannot allow this. We have to stand up and be counted here," he said during an interview on ANC's Rundown. 

Domingo is also representing Balgamel de Belen Domingo, Rodel Rodis, and Loida Nicolas Lewis, who have filed a complaint before the Ombudsman accusing Energy Secretary Alfonso Cusi, billionaire Dennis Uy and several others of graft over the sale of Chevron’s stake in the Malampaya project to the Davao-based businessman’s Udenna Corp.

“This is dwarfing what is involved in the Pharmally case. Malaki ‘to, we’re talking about P138 billion here,” he said on ANC Rundown.

By the estimates of Domingo’s group, the Malampaya contract will cost P138-billion, 17 times larger than the Pharmally deal for face shields which is being investigated in Congress.

“Our bottomline is that the Philippines, the Filipino people, would stand to lose about P42 billion because of this outright sale. But, that’s not the end of it. The end of it is we have estimated that the total losses over, during the entire duration of this contract which would be until January 2024, or even in the interim, would be about P138 billion. Translated to foreign currency it’s about $2.75 billion. We’re talking about that,” Domingo said.

“We can even use that for pandemic alleviation. For the program of the government. For the purchase of the masks. For the purchase of the (personal protective equipment). All of these should have been done and used for those purposes,” he stressed.

“What about the frontliners, the nurses who have not been paid up to now? Okay? People are losing jobs. We have to have some economic recovery along this line,” he said. “And that P138 billion would have [been] used for those purposes.”

“Now we have spiraling gasoline. Araw-araw meron tayong tumataas ang ating gasoline. For the past 10 weeks our gasoline prices had really spiraled. We could use that as a subsidy to the Filipino people. And we’re not using that because only one company, one group is benefitting from all these things,” he said.

A top Udenna official on Thursday defended the company’s acquisition of the Malampaya gas project, saying it did not involve a “sweetheart deal” with the government.

Udenna, through its subsidiaries, acquired a 90 percent stake in the Malampaya project by buying the 45 percent stake of Chevron for $565 million, and another 45 percent stake from Shell for $460 million.

Business groups, lawmakers, and other concerned groups, however, are questioning the deals.

Some have said that the Department of Energy, through the Philippine National Oil Company, should have exercised its right of first refusal and bought the stakes of Chevron and Shell—giving government full control of the vital energy facility, and all the profits from it.

“The Philippine government should have taken over without any further investment over that,” Domingo said.

“In any event, if they wanted to really put forward the $565M that have been paid allegedly to Chevron, they could have sourced it from Philippine banks. The Development Bank of the Philippines, the Land Bank. With all very very good terms.”

“They could have done that because at the end of the day, in January 2024, the Philippine government would own the entire service contract,” he explained.

Domingo added that government could have also moved to privatize the Malampaya gas project.

“Another alternative would be privatization, what they did with water concessions. But government could have privatized it at very good terms. They did not do that.”

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Domingo also noted that Udenna’s UC Malampaya admitted in a Senate hearing that it had no technical capability to run the Malampaya gas project.

“Again, during the Senate hearings, it was even admitted…the Udenna doesn’t have even any other contract of similar nature. In fact they don’t have any international exposure. In other words it was admitted that they did not have the technical know-how on this,” he said.

He added that the fact that some former Chevron, Shell employees are now with Udenna subsidiaries doesn’t help their case.

“Because you cannot say that the successor corporate entity, in this particular case the UC Malampaya, eventually renamed UC38, would have a technical and financial wherewithal for this. It cannot be said along that line because there’s a complete change of management, complete change of directorship.”

Domingo also stressed that Udenna’s acquisition of the Malampaya gas project cannot simply be relegated to personal or corporate transactions.

“It supplies about 37 to 40 percent of the Luzon electrical sources as well. So this is very important. If this is actually pursued, I mean, if they go to the conclusion that they will be taking over, then there’ll be a lot of problems, a lot of crisis going on, and this [is] actually owned by the Philippine government. 

“This is owned by the Philippine state. This is not a private contract. This is a contract between the Philippine government and the original contractors, Chevron and Shell. This cannot be relegated to a simply a personal or corporate transaction,” he said.

--ANC, 19 November 2021