8 business groups seek Malampaya deal probe

MANILA, Philippines — Eight business organizations yesterday called on the government to pursue the probe into the sale of shares in the Malampaya deep water gas to power project and closely look at the buyer’s financial and technical capability to make sure the transaction will not be disadvantageous to the public.

In a joint statement yesterday, the Energy Lawyers Association of the Philippines, Financial Executives Institute of the Philippines, Filipina CEO Circle, Integrity Initiative Inc., Investment Houses Association of the Philippines, Makati Business Club, Philippine Women’s Economic Network and Women’s Business Council Philippines called on the Senate and other concerned agencies to continue to investigate and take action on the sales of shares of the members of the Malampaya consortium.

“Given the acquirer’s lack of expertise and heavily financed nature of the proposed purchases, it is highly likely that they will take on partners. The government should scrutinize the buyer’s financial and technical capabilities and interests and should reserve, enforce and exercise its right to block and invalidate transfers of shares and control that may be disadvantageous to the Filipino people,” the groups said.

Last year, a unit of Udenna Corp. acquired 45 percent stake of Chevron Malampaya LLC in the Malampaya project.

Udenna Corp., through another unit, also signed a share purchase agreement with Shell Philippines Exploration BV for the latter’s 45 percent stake in the Malampaya project.

The deal with Shell has yet to be approved by the Department of Energy.

“We urge them to more fully explore the government’s reasoning 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,” the groups said.

The groups said there is also a need to look into why the government did not exercise its right of first refusal over Chevron and Shell’s shares in the project.

“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.

While the groups recognize that the government may have reservations about purchasing and paying cash for the shares, they said there is a need to look at whether the government could easily get financing for such a purchase, citing Malampaya’s stable and highly guaranteed revenue stream.

The group also said there is a need to look at why there was a failure to award a license, whether extension or to a new consortium by 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 are needed to explore and develop additional wells,” the groups said.