SEN. Sherwin Gatchalian is asking the Department of Energy (DOE) to justify the sale of Malampaya natural gas to a private company related to the Udenna Group led by Dennis Uy.
Gatchalian, chairman of the Senate Committee on Energy, called for a legislative review of the deal citing Malampaya’s importance in providing vital power supply to 6 million homes, among others.
“It talks about 6 million homes in our country,” the senator stressed, noting this constitutes “20 percent of our power requirements.”
He noted that Malampaya “powers about 35 percent of Luzon power requirements. So it is a very important asset.”
Moreover, Gatchalian reminded that Malampaya “generates P22 billion in government revenues to our government coffers. So it’s no ordinary asset.”
In short, he pointed out that “Malampaya powers about one in every five homes here. So it’s important that we keep our lights on, it’s important that we have a constant supply of gas.”
Gatchalian proposed that in order to do it, “we need to have very competent and financially strong operators.”
He noted, however, that “this is where the question comes in because in the law, it is very clear that you can do the sale, but the government needs to approve that at the end. And the reason for that is the need…[for] the public [to be sure] that the next operator is competent and financially strong.”
Gatchalian added that the Duterte administration, through the DOE, needs to evaluate the transaction, “making sure that it’s legal, it’s financial and technically compliant.”
“It needs to be approved,” he said, “and the logic for this is that DOE needs to assure the public, all of us, that the next new operator is competent and has the capability of running Malampaya and supplying electricity to our homes.”
Gatchalian confirmed the Senate Committee on Energy will “definitely call” an upcoming energy committee hearing.
He recalled that in their first hearing, DOE officials claimed they were “still in the process of evaluation,” noting that “it was not very clear to us.”
“What are the sets of criteria, or the criteria that they will use in terms of evaluating these. It has to be very clear to the public, what are the criteria,” Gatchalian said, adding: “And then, number two, if the new company is competent, based on those cases.”
Gatchalian clarified that “actually, there are two transactions. The first transaction, you can call it as a passive investor or the investment is passive, meaning it’s not operating. The Shell portion is the operator, whoever steps in to the Shell [portion] will operate the trade, will supply gas to our homes. The second transaction is very critical, because it will now require technical competence, meaning the new operator should have experience in the past.
Asked if the Udenna group would be qualified based on the “requirements,” Gatchalian said: “This is in the hands of DOE now. The mere fact that, personally, I made the statement, I have strong doubts personally. But we will let the process go through. DOE has a set of, like I said, DOE has a set of processes, and we will allow DOE to commence with the process but justified to the public as being the consumers, to be assured that the new owner is highly qualified.”
The senator pointed out that “this is a private transaction. So, Shell can invite other bidders and from my information they have. This is the only gas asset in the Philippines, so it’s a monopoly, so to speak, in terms of Shell, from my information, they invited other bidders. That’s their own prerogative but the government’s prerogative is to assure the public that whoever steps in is highly qualified.”
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