Tell me who your friends are: Why we should all be outraged about Malampaya

Dindo Manhit, President, Stratbase ADR Institute

This smells like Pharmally all over again — only on a grander, longer-term scale.

Sometime in September we were alarmed to note that the Malampaya gas field temporarily shut down its operations weeks before a scheduled preventive maintenance work. As a result, distribution utilities (DUs) had to switch to other sources and buy electricity from the Wholesale Electricity Spot Market (WESM) — a more expensive source. One plant had to operate at a reduced capacity while another had to temporarily stop operations altogether.

During that time, concerns were raised on how our power plants were prepared to handle energy requirements especially as the country was trying to open up the economy while still battling the COVID-19 pandemic.

The Malampaya gas plant, for instance, supplies fuel to 40% of the power needs of Luzon and 20% of the entire country. If the shutdowns were to continue, what would be the implications on power costs for households and businesses? What would be the extent of the disruption of their operations? How can we even proceed with our economic recovery?

The September shutdowns, it turns out, served as an omen of what was to be revealed to the Filipino people in October — that there are attempts to subvert existing laws and norms of decency in order to give undue economic advantage to certain favored friends of the people in power.

Three concerned citizens — University of the Philippines geologist Balgamel de Belen Domingo, US-based lawyer Rodel Rodis, and US-based businesswoman Loida Nicolas Lewis — filed cases against Energy Secretary Alfonso Cusi, businessman and presidential friend Dennis Uy, and 24 others before the Office of the Ombudsman for conspiring to “give unwarranted benefits and advantage” to Udenna Corp.’s acquisition of Chevron’s shares in the Malampaya gas-to-power project.

According to the complaint, the Department of Energy was remiss in its duties to review the financial and technical capacity of UC Malampaya — the company created for the sole purpose of this deal — and Cusi himself, as the approving authority, did not perform due diligence before giving the transaction his go ahead.

In an interview over ANC, petitioner Rodis branded the transaction the “most incredible crony deal” because the company, UC Malampaya, was not only debt-ridden but was only belatedly registered with the Securities and Exchange Commission — months after the deal was consummated.

Why exactly should Filipinos be outraged?

First, this is an in-your-face reminder that our country’s interest is inferior to the interests of presidential friends. Remember President Rodrigo R. Duterte’s unnatural defense of the Pharmally executives and his stinging personal attack on the senators who investigated this deal? The demeanor was a dead giveaway to how he regarded his friends and allies — he felt an overwhelming responsibility to protect them at all costs, even going to the extent of prohibiting Cabinet officials from testifying in Congress should they be summoned by lawmakers to shed light on various issues.

Now we are seeing it again: The Davao-based Mr. Uy is a known supporter and campaign contributor of the President back in 2016. His company, UC Malampaya, was only established in 2019 and has no sufficient capital to undertake a capital-intensive and technical project such as Malampaya.

Second, this issue has long-term implications on our economy. Power generation projects are never about the here and now. They are always contemplated based on future demand and future supply. Oil companies Shell and Chevron were originally tapped by the government so that they could provide the experience and expertise in developing the gas field into something economically and environmentally viable for the Philippine economy.

If we were to entrust the same task to a company that has neither track record nor credibility, and whose only credential is closeness to the power-that-be, then we face the very real danger of not meeting the energy needs for our economy to recover from this crisis and to survive in a post-pandemic world.

Third, it runs counter to the virtues of transparency and accountability that we were promised at the outset of this administration.

There will be a war on corruption, we were told. It will only take a whiff of corruption for the President to take action on corruption. And yet, where are we now? What kind of officials do we have, doing brazen things, and attacking those who dare question government transactions?

Cusi has branded the case as speculative, without basis, and malicious as he insisted that the deal was above board. He said the petitioners were pretending to be patriotic when two of them were not even living here, that at least one of them was a vociferous critic of Mr. Duterte, and that this is just being raised because of the forthcoming elections. No, Mr. Secretary. An act of wrongdoing remains so no matter when it is raised, and who calls our attention to it.

On the contrary, this is a good time for the Malampaya issue to be raised. This will help us decide on the kind of leaders we should elect or reject.

For too long, Filipinos have been swayed by the grandiose promises of politicians who say they put the interests of the people first — and yet do otherwise. Time to snap out of the spell.

This article was originally published in BusinessWorld.

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