By Sonny Fernandez
Former Energy USec. Eduardo Mañalac and NYMWPS appeal to President Marcos Jr. to terminate the Service Contract 38 when it expires in 2024. (File photo courtesy of PNA)
Former Department of Energy (DoE) Undersecretary Eduardo Mañalac and the National Movement for the West Philippine Sea (NYMWPS) on Monday, February 13, appealed to President Bongbong Marcos to terminate Service Contract 38 or the Malampaya project when it expires in 2024. In a news release following a web conference and press briefing last Thursday, February 9, Mañalac emphasized the importance of ensuring the energy security of the country amidst rising fuel costs, the Ukraine-Russia conflict and the increasing and expanding Chinese aggression in the West Philippine Sea, believed to be immensely rich in oil and natural gas. He stressed that “Malampaya in a sense, is a key factor in the energy security of the country. To supply, to power enough, (with) about 3000 plus megawatts of power capacity. To electrify or provide electricity to 20% of what we need in the Philippines.”
Former USec Mañalac believes the Filipinos do not enjoy the maximum benefits of Malampaya Deep Water Gas-to-Power Project. (File photo courtesy of PNA)
The Malampaya project is currently being operated by Prime Infrastructure Capital owned by Enrique Razon Jr. and Udenna, owned by Dennis Uy. Mañalac and NYMWPS instead, asked Marcos Jr. to order the Philippine National Oil Company (PNOC) to operate the Deepwater Gas-to-Power Project. The PNOC was created in 1973 by Former President Ferdinand Marcos Sr. for the purpose of taking over operations after the contract ends. Mañalac said this process will place direct control of Malampaya operations in the hands of the government. He added that this will also serve to maximize earnings for the Filipino people, who are at this point, losing billions of pesos to what they believe as unqualified private companies.
Udenna and Prime Infra currently earn P50M each, or a combined P100M daily from Malampaya gas the same value the Philippines government can earn if it takes full control of its operations, according to Mañalac.
Presidential Decree No. 87 or the Oil Exploration Act of 1972 mandates that energy development activities should ensure the biggest advantage to the people.
Mañalac calculated what can P50 million a day from Chevron alone can do to help Filipino fishermen who are risking their lives in the West Philippine Sea.
“The government could buy from 4 to 8 boats every day to provide our fishermen with a new and effective means of livelihood. We can supply our fishermen with modern boats like these so they can go out to fish beyond 3-4 kilometers of our shores and compete with the big huge fishing vessels of the Chinese, “ he elaborated.
Former DoE USec. Eduardo Mañalac explains what a daily income of P50M from Malampaya can buy for fishermen in the West Philippine Sea. (Photo courtesy of NYMWPS)
PD 87 also requires that only companies that possess technical expertise and financial capability shall be granted service contracts. In October 2022, the energy department approved the takeover of the shares of Shell Philippines Exploration BV (SPEX) in Malampaya by Razon’s Prime Infra following their review of the deal which they found to be “technically, financially and legally qualified.” Razon for his part welcomed DoE’s approval of the sale “given the urgency to sustain the operations of Malampaya – a vital energy installation and symbol of national pride – and to plan for the further development of the existing reserves in light of the current power undersupply.” Mañalac and the NYMWPS had earlier questioned the process by which Prime Infra and Udenna acquired the Malampaya interests from Shell and Chevron because the two service contractors allegedly do not have the required technical capability to operate the gas field.
“.. kahit yung kumpanya ni Razon ay wala ring technical capacity wala ring qualification. Na sinabi mismo nung presidente nila na ito yung una nilang negosyo, sa langis at gas. So, saan kayo nakakuha ng ekpiryensa na sabi ng batas, kailangan technically experienced ka," Mañalac pointed out. On the other hand, Dra. Celia Lamkin, NYMWPS Global chair, added that they are deepening their examination of the Chevron-Udenna deal with the appropriate government agency.
“And that’s the reason why we sent a petition to COA for a fraud audit, the transfer of Chevron to Udenna as well as from Shell to Udenna Corporation,” she specified.
Former DoE USec. Eduardo Mañalac cites the reasons why Razon's Prime Infra has no technical expertise to operate Malampaya as required by the law. (Video courtesy of NYMWPS)
Dra. Celia Lamkin, NYMWPS Global Chair, details the conduct of their investigation of Malampaya service contractors. Video courtesy of NYMWPS.
Prime Infra and Udenna each controls 45% stake or a total of 90% of the shares in the gas field. PNOC holds the remaining 10%.
Following the appeal of Mañalac and NYMWPS that appeared in the Philippines and US media on Monday, Energy Secretary Raphael Lotilla, the following Tuesday, February 14, issued a statement defending the deal saying "PD 87 embodies an early example of public-private partnership (where the private sector bears all the risk) and, in the case of the Malampaya Deep Water Gas-to-Power Project, a successful one."
He maintains, that the Philippines government has the "full control over all aspects of gas and oil exploration and development," and that the service contractor is just a contractor.
But what Mañalac and NYMWP mean by full control or takeover is that, the government will own the project 100% without the investment or participation of the service contractors, in this case, Prime Infra and Udenna.
However, Lotilla said that as for now, DoE "is withholding any comment on the request for the extension of Service Contract 38 Consortium while the same is under review by the Office of the President."
DoE did not also challenge the claim of Mañalac and NYMWPS that both Prime Infra and Udenna do not have the technical expertise provided for by the law and are thus, legally questionable.
In the case of Udenna, however, three individuals filed criminal charges against then Energy Secretary Alfonso Cusi, Davao-based businessman Dennis Uy, former and current officials of state-run PNOC-EC, and Chevron Philippines over the alleged anomalous sale of the latter’s shares in Malampaya to Udenna, in October 2021.
Lotilla assures that the "interest of the country in promoting gas and oil resources for the people's benefit remains paramount," as mandated by PD 87.
In other countries like Norway, the government invests their oil money into Sovereign Wealth Fund to pay for pensions which the Marcos Jr. administration may adopt in its proposed Maharlika Wealth Fund.
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Reference Link to full NYMWPS Webinar on Malampaya Updates and Developments, February 9, 2023
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