‘Debt-ridden’ gov’t can’t compete with private entities in energy market — Gullas
Cebu Rep. Eduardo Gullas. Facebook photo
MANILA, Philippines — Amid the commotion on the Udenna Corporation’s purchase of a majority stake in the Malampaya gas field, Cebu Rep. Eduardo Gullas said that more private firms want the government to stay out of the energy market as it is a “debt-ridden giant” that cannot compete in the said field.
In a statement on Wednesday, Gullas noted that the government’s debt has ballooned by almost P2 trillion – from P10.027 trillion in October 2020 to P11.971 trillion as of October this year, due to aggressive spending to suppress the COVID-19 pandemic.
“The truth is, the government is a debt-ridden lumbering giant that cannot compete with highly capable private entities in running and growing energy assets,” he said.
This came after the Makati Business Club (MBC) and several other business groups urged the Senate to look into why the government did not exercise its right over the Malampaya gas project when Dennis Uy — who they did not name but referred to as a “private purchaser” — bought a controlling stake despite having no prior experience in gas exploration.
Along with this request, the MBC also called on the government to find a way to get financing for the purchase of shares of the gas project.
According to Gullas, however, the MBC does not speak for the entire business sector in the country.
“There are far more representative chambers of commerce and industry in the country that want the government to stay out of any business and avoid competing with private enterprises,” Gullas said in a statement on Wednesday.
“In fact, we would not be surprised if business groups in the provinces, such as those in Cebu and Davao, tend to perceive the MBC as an elitist club from ‘imperial’ Manila,” Gullas added.
Gullas also explained that the government’s petroleum service scheme is “to let private corporations assume the risk of spending capital to discover and develop our indigenous gas and oil resources.”
Further more, he said that there are already Filipino tycoons engaged in petroleum service contracting, “so there’s no need for PNOC to come in and compete, more so because the government does not have the wherewithal.”
“We must also stress that any government acquisition and operation of a new energy asset would be highly regressive, considering that the State has been disposing of them for decades,” Gullas said.
Gullas then recalled that in 2007, under pressure to bridge the budget deficit, the government sold its 60 percent stake in PNOC Energy Development Corp. (PNOC EDC) for P58.5 billion to a partnership led by Lopez-owned First Gen. Corp.
“When the government sold PNOC EDC, nobody protested and said the government should keep the asset because it is the country’s largest and the world’s second-largest geothermal energy producer,” Gullas said.
He also cited the case of the National Power Corp. (Napocor), whose generating and transmission assets were sold off and are now owned and operated by private firms.
All this developed after Shell recently agreed to sell its stake to Malampaya Energy XP Pte Ltd, a subsidiary of Udenna Corp, owned by Dennis Uy, one of President Rodrigo Duterte’s major campaign contributors.
This means the Udenna is set to own 90 percent of the project, having also earlier bought the shares of Chevron Malampaya LLC that was under Chevron Philippines Ltd.
The remaining 10 percent is currently held by PNOC-EC.
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