DID we miss something here? Or are Energy Secretary Jose Rene Almendras and his deputy, Undersecretary Jay Layug, playing some kind of a trick on the public and even on President Aquino himself? These questions and a number of others pertaining to the latest initiatives of the Department of Energy (DOE) are being asked in view of conflicting reports being issued by Almendras and his boys on these critical undertakings.

Take the case of the multibillion-dollar Malampaya Natural-Gas Project, which has been billed as one of the biggest foreign investments in the country and decidedly a key component of our power and energy development aspirations. In a quirky kind of “wash up,” the department is apparently backpedaling on its earlier pronouncement that the expiring Malampaya service contract (Serrvice Contract 38), which was handed over without any bidding to the Shell Philippines Exploration BV (Spex) and Chevron Malampaya Llc. consortium (each with 45 percent; PNOC-EC holds the remaining 10 percent) sometime back was being extended for another 15 years. This change of heart was apparently prompted by the demand of certain legislators, led no less by Senate President Juan Ponce Enrile and Sen. Ralph Recto, chairman of the Senate Ways and Means Committee, for the DOE to address persistent charges that we have been shortchanged in this deal. More problematically, the senators want to find out what our total revenue share, already diminished by various unauthorized charges imputed by Shell and Chevron, has been and how the same has been spent so far. We are talking here of hundreds of billions of pesos accumulated over the years which, as Recto pointed out, is now down to P77 billion.

Even that balance of P77 billion, which is supposed to be lodged in a special account at the National Treasury, has been lost and co-mingled beyond recognition in the general fund. The conflicting issuances of Almendras, Budget Secretary Butch Abad and even Finance Secretary Cesar Purisima on its provenance, status and disposition make the accounting truly perplexing. If left improperly sorted out, it can be even be a bigger scandal than the riveting DBP/Philex/MRT 3/Meralco/Lehman/Ongpin saga now being played out at the Senate.

Almendras’s conflicting issuances

Which is why we suspect that Almendras’s issuance on October 5 that the 10- to 15-year extension of the Malampaya Deep Water Gas-to-Power service contract remains “under consideration” despite an earlier advise on August 10 that the same has been extended. That earlier report coincided with the President’s visit to the consortium’s onshore facilities in Tabangao, Batangas, at which time Spex and Chevron triumphantly reported to the Chief Executive that they were investing $1 billion to “extend the life of the Malampaya Gas for another 15 years until 2039.”  Now, why should these guys make that kind of an announcement if their contract has not been extended at all? Why should they even ask the President, Almendras and his crew to witness their signing of a “front-end basic design and engineering package for the second and third phases of development of the field” if they have not inked anything with the government? Or, at the very least, have been assured that their service contract will be extended no matter what the new procurement and contracting rules say?

In a classic case of regulatory capture, which is the contracting equivalent of the behest loan being discussed in the DBP/Ongpin hearings, the task of justifying what appears to be a questionable and problematic arrangement has been left to the regulator himself—Almendras. He will now have to explain and reconcile these conflicting issuances and clear the air, as it were. Has the service contract been extended without any bidding contrary to the rules? What are the terms of this extended contract? How does this contract compare with the existing one for the first phase of development? What are our expectations from this contract? How much are we valuing our contribution to this endeavor? These and other issues and concerns will have to be explained by Almendras and his boys before we ever again believe in all their other pronouncements on this project and others, such as the spike in oil prices, electricity and other workouts being handled by the DOE. But first, these guys must come out with a kind of end-of-contract review to clearly show what the first contract is all about and how has it been implemented for our people’s benefit. Without that cost-benefit analysis, we will never know whether this administration and all the previous ones that managed this contract for the country did their best by our people. Given Almendras’s actions and issuances thus far, I have serious doubts he will be up to our people’s scrutiny.

That will not come as a surprise. Almendras and his deputy, Layug, and a good number of senior administration officials are neck deep, maybe even drowning, in conflict-of-interest situations. Both worked for companies heavily involved in industries and sectors that they are now regulating or directing. Almendras got his spurs, so to speak, working for the Aboitiz Group, which is into power and energy, while Layug, a lawyer, used to be the senior counsel for the Chevron Malampaya Llc. which, together with Spex, controls and operates the country’s natural-gas field. They maybe eminently qualified for the job and may be untainted by any whiff of corruption or nonperformance. Well, not yet or maybe unreported, anyway. The question is after almost 18 months on the job, they seem to be unable to shed their connections and by their latest actions have tended to favor their previous employers to the detriment of the public and the competition. It is as if they have never really left the scene and are now using their positions to expand their previous employers’ business interests. They are, in a very real sense, not acting as regulators but as the regulated. A clear case of regulatory capture. And we are just skimming off the surface here and on only one project if we go by their actions on Malampaya.

What about Singson?

Another senior government official who may soon enough—if he is not there yet—get into a serious conflict-of-interest, regulatory capture situation is Public Works Secretary Babes Singson. As competent and professional as he appears to be, his being in a department handling the bulk of the country’s infrastructure works, as well as regulating key utilities and basic services, such as water and sewerage and tollways, to name just two of the front-line operations, opens him up immediately to such a problem.

Take the case of water and sewerage service. Singson, who used to head Maynilad Water, one of two Manila Water Sewerage System (MWSS) concessionaires, will now be tested as he embarks on what is being billed as a “rationalization” of the use of the country’s water resources as the President’s “water czar.” That work involves not just reviewing the protocol for dam operations, although that is the immediate concern. That involves deciding on the powers and responsibilities of the various “water-related agencies” from the MWSS and its concessionaires to Napocor and the private hydropower operators to the NWRB to the LWUA to the DPWH itself to the Department of Agriculture/NIA and so on and on. How he will balance interests and priorities among competing interests, both public and private, will not only tell us what kind of a man Singson is but also whether he has shed his corporate links to serve as a public servant.

To his credit, the guy had earlier given up his ex-officio chairmanship of the MWSS “out of delicadeza.”  But he is not off the hook on that front just yet. We are told that Bagong Henerasyon Party-List Rep. Bernadette Herrera has compiled a huge stack of documents on the ways and practices of the MWSS and its concessionaires that includes the time when Singson was still with Maynilad Water. We are advised that there are a number of questionable workouts in these units at the time. How many of those may be attributed to Singson and his crew, we have yet to know. Suffice it to say that once these documents get public we will know how Singson comported himself and how his actions now and in the future impact on his previous connections.

Singson will also be walking a thin line as far as his job as the tollways regulator is concerned. Although he shares the task with the Department of Transportation and Communications (DOTC) and will probably give Transportation Secretary Mar Roxas the floor as far as this undertaking is concerned, his actions will still be monitored, especially since his previous employer, Maynilad Water, is part of the larger conglomerate called Metro Pacific controlled by business tycoon Manny V. Pangilinan, which is the country’s biggest tollways operator to date. We are advised that Pangilinan’s partner in both Maynilad and the tollways happens to be construction giant DMCI, which is also a listed company and whose leadership is also close to Singson. Of course, Metro Pacific, through its tollways subsidiary, has been an exemplary operator but who knows there may come a time when Singson’s mettle will also be tested as the public gets tested by the increase in toll and is now more focused on the arrangements entered into by the government with these operators. When that day come we will find out if Singson is the kind of person he wants his subordinates and peers to believe he is or some other. Abangan!