The Philippines’ energy ministry yesterday defended the sale of the Malampaya gas project – formerly controlled by a Shell (AMS:RDSA) and Chevron (NYSE:CVX) joint venture – to a company run by an ally of President Rodrigo Duterte, dismissing a graft complaint.
Udenna Corporation, a conglomerate controlled by tycoon Dennis Uy, a close associate of Duterte, made a deal with Chevron in late 2019 to buy a 45% stake in the country’s Malampaya gas-to-power project, valued at $565 million. In May this year, Udenna also struck a deal worth up to $460 million for Shell’s 45% share of Malampaya.
A criminal complaint against Energy Secretary Alfonso Cusi, businessman Dennis Uy, as well as officials from the former Chevron and Shell subsidiaries in the Philippines, and several others, was filed with the Office of the Ombudsman over alleged anomalies in the Malampaya project leading to losses ranging between 21 to 42 billion pesos or $413 million to $826 million to the Philippine government, reported local media.
The Department of Energy (DOE) said the graft complaint, which was filed by a group of “concerned citizens” on Monday, was baseless
The DOE said in a statement that it will formally address the complaint, but noted “the case is speculative, without basis and malicious. The questioned transaction is above-board.”
“It should be noted that two of the alleged complainants are Filipino-Americans who were reportedly identified with the ‘Oust Duterte’ movement in the US,” added the DOE.
“Coincidence or not, the timing of the filing of the case is curiously close to the onset of the political season with the recent filing of the certificates of candidacy of national and local candidates for elective office,” said the DOE.
“The deal was subject to a Senate inquiry into questions over Udenna’s technical and financial ability to operate the project, with some senators expressing doubts about the soundness of the DOE’s financial evaluation of the buyer,” reported Reuters.
The inquiry though has yet to be concluded.
The DOE cleared the Udenna-Chevron deal in April.
“Uy, the biggest contributor to Duterte’s presidential campaign in 2016, has rapidly expanded his business interests since then, taking over shipping lines, resorts, casinos and investing in a telecommunications venture with state-owned China Telecom, among other projects,” noted Reuters.
Udenna is set to control 90% of Malampaya, having bought the other 45% stake from Shell, a deal that is awaiting regulatory approval. The project provides fuel for power plants with a combined capacity of more than 3,000 megawatts.