Arroyo & cronies flock into energy

GOTCHA - Jarius Bondoc -

The Arroyos and their cronies are converging in the energy industry. That’s where the big bucks are.

It began three years ago when the government sought a partner to explore oil around the Palawan natural gas field. After long study by state-owned Philippine National Oil Co. of six offers, a Malaysian firm bagged the deal. It was but fitting, industry experts say, since the explorer not only offered the best terms but also had experience drilling in Palawan seas. But Malacañang set aside the deal on grumble of a loser, newcomer Burgundy Group. As the embatled PNOC president resigned, the Palace ordered a “full public bidding.” Two years passed but the event never occurred. Instead the energy department and PNOC, under new bosses, awarded to Burgundy the contract to mine 25-40 million barrels of oil. It allegedly was the sole local bidder and so entitled to the Constitution’s Filipino-first policy. But something else gave Burgundy first crack. Presidential spouse Mike Arroyo purportedly lobbied for it. Among Burgundy’s incorporators is the First Couple’s personal accountant. The firm supposedly was named after their condo building in Quezon City.

Months after the rescinding of the Malaysian contract, friends of the First Couple expanded into power generation. The Aboitiz Group has long been in electricity distribution in Visayas and Mindanao. In 2006 it bought from state-owned National Power Corp. the 360-mw Magat Dam hydroelectric plant in Cagayan Valley. A year later it acquired similar hydro plants in the Ambuklao-Binga Dam complex in the Cordilleras. To be sure, the Aboitiz Group was the highest bidder of both privatization deals. Still the business buzz is how the conglomerate was able to skirt a ban on cross-owning generation, distribution and transmission utilities. Under the Electric Power Industry Reform Act, distributors may not be generators and vice versa, except if already so before passage of the law in 2001. Shipping tycoon Endika Aboitiz, an election fund-raiser of Gloria Macapagal Arroyo, was reported to be re-concentrating on the new field.

Like Endika, ports magnate Ricky Razon is an Arroyo fund-raiser. Recently Razon’s firm also funded the bid to acquire state-owned Transco. Controversies marked the run-up. First, one of four bidders, a group that included an ex-finance secretary, was eased out of the race although gearing to make the highest offer. Then, it was pointed out that Razon’s firm cannot join the bidding because an Aboitiz brother-in-law who sits in his board also sits in the Aboitiz power utility, another case of forbidden cross-ownership. Lastly, the official heading the bidding is a partner and officer-on-leave of Razon’s port operation. (A protégé of the conflicted partner became head of Napocor.) Malacañang ignored all this and went on to give the state transmission lines to Razon’s National Grid Corp. of the Philippines. NGCP took over the state’s guaranteed cash-earner of transmitting electricity from generators to distributors. Before that, the policy was to not privatize the transmission grid for national security.

The latest to join the energy binge is Arroyo political pal and prime Marcos crony Danding Cojuangco. The founder of the Nationalist People’s Coalition is also CEO of food-and-beverage giant San Miguel Corp. Last year Cojuangco associates in Ashmore Corp. bought Saudi Aramco’s 40-percent shares in Petron, RP’s largest oil firm (42-percent market control). They then arm-twisted the PNOC to sell the government’s own 40 percent at the same price, under a fuzzy interpretation of the right of first refusal. Thus without public bidding, the government’s prized asset passed onto private hands. Soon afterwards Ashmore ceded majority of its Petron shares to SMC. Ashmore reps — Marcos trade minister Roberto Ongpin, SMC director Iñigo Zobel, and Joselito Campos (son of a confessed Marcos front) — used a newly formed British Virgin Islands as conduit for the deal. The Presidential Commission on Good Government, tasked to recover the ill-gotten wealth of Marcos and cronies, has not dared to investigate. Its agents sit in the SMC board.

SMC also bought the state-run GSIS’ 27-percent shares in Meralco, Luzon’s largest electric utility. Global 5000, again led by Ongpin, Zobel and Campos, bought up 11 percent more from state-run SSS, Land Bank, and Development Bank of the Philippines. Whether or not Cojuangco will use the combined 38 percent to wrest control of Meralco is beside the point. The split purchase allegedly skirted the rule for a buyer of at least 30 percent of a listed company’s stock to offer the same price to smaller shareholders. The Securities and Exchange Commission has yet to investigate.

Completing the energy stranglehold is the rise of presidential son Rep. Mikey Arroyo as chairman of the House energy committee. The body influences industry policies and developments. Arroyo also appointed a province-mate, ex-congresswoman Zenaida Ducut from whom Mikey inherited the legislative seat, chief of the Energy Regulatory Commission. The ERC regulates transmission, generation and distribution utilities.

* * *

E-mail: [email protected]











  • Latest
  • Trending
Are you sure you want to log out?

Philstar.com is one of the most vibrant, opinionated, discerning communities of readers on cyberspace. With your meaningful insights, help shape the stories that can shape the country. Sign up now!

or sign in with
no session for state
no session for code
no session for id_token
no session for user