Takeaways from AP's report on Philippines governor's interest in natural gas

BATANGAS, Philippines (AP) — The Philippines is engaged in a major buildout of natural gas power at a time when scientists say the world needs to urgently phase out fossil fuel use because of climate change. Analysts say Filipinos will likely pay more for their electricity and that additional future needs could have been met with clean renewables.

An Associated Press investigation found that a major cheerleader for natural gas, Gov. Hermilando Mandanas of Batangas province, stood to benefit from the buildout.

Here are key takeaways from AP's report:

The project

The government has ambitions for making the Philippines a liquified natural gas hub for the Asia-Pacific region. And Batangas province is at the heart of where it’s happening.

Four gas power plants lie along the coastline about two hours south of the capital Manila, and four more are planned. Six new terminals for importing the chilled and liquified gas are on the way or already operating.

Mandanas told the AP that the electricity is badly needed for development that will benefit all of the Philippines.

The Mandanas family interest

Mandanas owned the largest share in a real estate firm, AbaCore Capital Holdings Inc., that soared in value as energy companies moved in. The governor promoted the expansion in media interviews and public events. And AbaCore launched its own natural gas project.

Mandanas led a takeover of AbaCore in the 1980s, building it into a real estate behemoth beyond its original interests in mining and gaming. When he was elected governor in 2016, he stepped down as CEO and his wife, Regina Reyes, took over. But company documents show that as of last fall, Mandanas still owned almost 30% of the company.

Reyes was open about her husband’s policies benefiting the family company. She told shareholders in 2019 that programs “implemented and led” by her husband would boost AbaCore.

A deal signed in 2019 involved an AbaCore sister company in which Mandanas now holds a large stake. The AbaCore affiliate and three Chinese firms agreed to build a $3 billion LNG complex in the fishing village of Simlong. Four properties owned by the group, including the land where the power hub will be built, were valued at $6.2 million before the deal. Afterward, they were revalued at five times as much.

Mandanas said “probably one of the subsidiaries sold a piece of property” to the developers, indicating a distance from the transaction. He denied his associated businesses are involved with the buildout and called natural gas the best choice for the country. And he said AbaCore “is not in any energy business here in Batangas.”

What ethics experts say

Legal experts said the dealings violate Philippines law on ethics in public office and possibly the nation’s law on local government. Philippine politicians are not allowed to own major stakes in companies with goals that could be at odds with their official duties. Governors must maintain a balanced ecology and conserve marine resources.

Michael Henry Yusingco, a lawyer and fellow at the Philippine Institute for Autonomy and Governance, called the situation a clear conflict of interest that could merit Mandanas’s suspension or removal from office.

Elizabeth David-Barrett, director of the Centre for the Study of Corruption at University of Sussex, England, reviewed the AP’s findings and agreed with Yusingco that they amount to a conflict of interest and the “abuse of entrusted power for private gain which harms the public interest.”

Barnaby Pace, at the nonprofit Center for International Environmental Law, said LNG projects should be reviewed in light of the information.

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