[OPINION] The president’s hand in Malampaya
There are several significant issues at the heart of the Malampaya controversy that make it the most cheeky example of cronyism, crushing even the worst during the Marcos years and the Pharmally P87 billion scandal which, on the one hand, has enriched the hawkers of an under-capitalized company. start-ups and on the other hand, foreign nationals wanted for securities fraud.
While the Marcos years left our economy plundered, thousands of lives lost and democratic institutions deeply damaged, we were not sold downstream to a hostile hegemonic foreign power or to crooked hawkers bold enough to feed and fatten up. greed and influence at a time when our people are most vulnerable.
The similarities are troubling, however. Both directly implicate the President of the Republic and his uncontrolled powers wielded almost like an authoritarian autocrat would usurp legislative powers by imposing martial law, in one case, and in another, using presidential influence to enrich cronies.
To be precise, two eerily similar presidents end the Malampaya deal. One is long dead, his rotten corpse enlisted in rot and dust, the horrors and atrocities under his reign are almost forgotten but whose legacy is unearthed, resuscitated and reanimated. The other is determined to perpetuate a curse that mirrors our worst nightmares, whether they happened in the past half-decade or inflicted half a century ago.
The takeover of the Chevron Malampaya LLC service contract by an inexperienced, negative capitalization and technically unqualified start-up is critical to our energy security, without any expertise in hydrocarbon exploration, production and refining. The parent company of the outgoing entrepreneur is Chevron Corporation, worth $ 136 billion. Such stark differences permeate the transfer of public interest rights where Malampaya supplies 30% of Luzon’s energy.
Contrary to the claims of the Department of Energy (DOE), this is not a private matter of simple transfer of shares to a start-up, in particular a start-up heavily in debt and born from a pedigree technical, experiential and financial non-existent. UC Malampaya Philippines Pte. ltd. (UC 38) which now holds the rights to the service contract was quickly incorporated at the end of 2019. It is a two-year company.
More than a transfer of shares, it is essentially a critical transfer of rights under a service contract which highlights the buyer’s inherent inexperience and lack of technical capacity, as its deficiencies would have been revealed if the prior approvals had been requested by law as necessary.
The parameters for approval are stipulated by Presidential Decree 87 (PD 87) drafted by Ferdinand Marcos weeks after he declared martial law when he padlocked Congress.
Article 5 states: âExecution of the contract authorized by this law. Any contract authorized here must, subject to the approval of the President, be executed by the Petroleum Council created by this law, after public notice, prequalification and public call for tenders. or concluded through negotiations. ”
Article 11 reinforces the need for prior approval by stipulating: âTransfer of rights and assignment. Rights and obligations under a contract performed under this Act shall not be assigned or transferred without the prior approval of the Office of Energy Affairs. âAs assignor to enter into such a contract with the government. Only when the assignee is an affiliate of the assignor are approvals automatic.
Is UC 38 as qualified as Chevron Malampaya LLC?
Service contracts are approved by the president. When contracts are denied extensions and are effectively denied approval, the same approval authority should be involved. It should be noted that in 2018, requests to extend Malampaya service contracts in view of the resources discovered but unexploited were refused by the DOE.
The Petroleum Board is the predecessor of the DOE. Prior approval is given to the president. Handwritten by Marcos, it applies to Rodrigo Duterte, thus requiring the prior presidential approval of the resumption of the service contract from Chevron Malampaya LLC. While pre-approvals can be delegated to an alter ego (another me), the inherent responsibility and accountability rests with the president.
This controversy does not end simply at the gates of MalacaÃ±ang. He spawns from his highest offices. If the resumption of the service contract from Chevron Malampaya LLC is a consummate act, it must have received the prior approval of Duterte. Otherwise, it is null and cannot be executed by the DOE.
(Dean dela Paz is a former investment banker and managing director of a New Jersey-based power company operating in the Philippines. He is chairman of the board of a renewable energy company and is a retired professor of trade policy, finance and mathematics.)
Disclaimer: The opinions expressed in this blog are those of the blogger and do not necessarily reflect those of ABS-CBN Corp.