Philippines defends gas deal with president's ally after graft complaint

FILE PHOTO: Philippine President Rodrigo Duterte speaks at Villamor Air Base in Pasay, Metro Manila, Philippines, February 28, 2021. REUTERS/Eloisa Lopez/File Photo

MANILA (Reuters) - The Philippines' energy ministry on Tuesday defended the sale of an oil and gas concession to a firm controlled by an ally of President Rodrigo Duterte, dismissing a graft complaint that alleged preferential treatment as "malicious".

Udenna Corp, a conglomerate controlled by tycoon Dennis Uy, a close associate of Duterte, made a sale and purchase agreement with Chevron in late 2019 for a 45% stake in the country's Malampaya gas-to-power project, valued at $565 million.

The Department of Energy (DOE) said the graft complaint, which was filed by a group of "concerned citizens" on Monday, was groundless.

"The case is speculative, without basis and malicious. The questioned transaction is above-board," it said in a statement.

The deal was subject to a Senate inquiry into questions over Udenna's technical and financial ability to operate the project, with some senators expressing doubts about the soundness of the DOE's financial evaluation of the buyer.

The inquiry though has yet to be concluded.

The DOE cleared the Udenna-Chevron transaction in April.

Uy, the biggest contributor to Duterte's presidential campaign in 2016, has rapidly expanded his business interests since then, taking over shipping lines, resorts, casinos and investing in a telecommunications venture with state-owned China Telecom, among other projects.

Udenna has previously insisted Uy's association with Duterte has not given his businesses an unfair advantage.

Udenna is set to control 90% of Malampaya, having purchased the other 45% stake from Shell Philippines Exploration BV, a transaction that is awaiting regulatory approval. The project provides fuel for power plants with a combined capacity of more than 3,000 megawatts.

Udenna in a statement said it had not seen the complaint and only learned through media reports.

"At the proper time and venue, we will address all allegations raised against the company to prove that everything is done above-board," Udenna said.

Chevron did not immediately respond to a request for comment.

(Reporting by Enrico Dela Cruz, Neil Jerome Morales and Karen Lema; Editing by Nick Macfie)