Senate of the Philippines

Senate transmits to Ombudsman proposed raps vs Cusi over Malampaya deal

Ralf Rivas
Senate transmits to Ombudsman proposed raps vs Cusi over Malampaya deal

MALAMPAYA DEAL. Senator Sherwin Gatchalian and his legal team transmit to the Ombudsman the Senate resolution against top energy officials

Senator Sherwin Gatchalian

Energy Secretary Alfonso Cusi says he is 'elated' that the issue on the Malampaya deal has been sent to 'the proper legal forum'

MANILA, Philippines – The Senate resolution backing the call to file criminal and administrative charges against Energy Secretary Alfonso Cusi and other officials over the allegedly anomalous Malampaya deal was transmitted to the Ombudsman on Friday, February 4.

It was Senate energy committee chair Senator Sherwin Gatchalian and his legal team who handed over the resolution to the Ombudsman.

The Senate recommended criminal cases against the following:

  • Cusi for violating Republic Act 3019 or the Anti-Graft and Corrupt Practices Act
  • Energy Undersecretary Donato Marcos, officer-in-charge (OIC) Undersecretary Roberto Uy, Assistant Secretary Leonido Pulido, Assistant Secretary Gerardo Erguiza, Director Cesar Dela Fuente, Director Arthus Tenazas, Director Araceli Soluta, OIC Assistant Director Guillermo Ansay, Chief RJ Delos Santos, chief administrative officer Thelma Cerdeña, and Demujin Antiporda for violation of Section 3(e) of RA 3019

The Senate also urged the Ombudsman to file administrative charges against Cusi, Uy, Pulido, and Erquiza for gross neglect of duty and grave misconduct.

It urged the Civil Service Commission to probe and file administrative charges against Dela Fuente, Tenazas, Soluta, Ansay, Delos Santos, Cerdeña, and Antiporda.

In a privilege speech on Wednesday, February 2, Gatchalian asked Cusi to resign for “bending over backwards” to approve businessman Dennis Uy’s acquisition of a Chevron subsidiary with a 45% stake in the Malampaya gas field.

The Senate resolution stated that Cusi violated Service Contract No. 38 and Presidential Decree No. 87 executed under Department Circular No. 2007-04-0003 of the Department of Energy (DOE). Section 3 of this particular DOE circular requires the prospective transferee to be evaluated based on its legal, technical, and financial qualifications. 

The financial evaluation done by DOE Financial Services showed that UC Malampaya, an indirect subsidiary of Uy’s Udenna Corporation, had a working capital of negative $137.16 million. UC Malampaya bought Chevron Malampaya LLC, later renamed to UC38 LLC after the sale, which had a working capital of $177.42 million.

Simply put, the Senate concluded that the DOE violated its own circular by allowing an inexperienced company with negative working capital to buy the coveted Malampaya shares.

“It failed to evaluate UC Malampaya which was, based on the DOE’s own admission, not financially qualified as it has a negative working capital of $137.156 million, which is clearly insufficient to meet its proportionate share in the Work Program and Budget for 2020 amounting to $64.455 million,” the resolution said.

“The DOE’s technical evaluation also did not include the material fact the UC Malampaya and its ultimate mother company, Udenna Corporation, have no prior experience in oil and gas exploration.”

‘Elated’

In a statement on Friday, Cusi said that he is “elated” that the issue has now been brought before the “proper legal forum where evidence, logic and reason are used as bases for determining whether or not an irregularity has been committed.”

“That had not been the case at the Committee hearing where innuendoes, speculation and hearsay propagated by certain business interests dictated the course of the so-called ‘investigation,’” Cusi said in a Viber message to reporters.

Cusi said Gatchalian had “chosen to lend his ear to those [with] adversarial business interests” and sought to “undermine the DOE’s ability to conduct a comprehensive evaluation” regarding the share sale.

Udenna earlier maintained that there was nothing wrong with the deal as it was a private undertaking.

The holder of the other 45% operating stake in Malampaya, Shell Philippines Exploration, which was later bought by Uy’s Malampaya Energy, required the approval of the DOE. The remaining 10% stake in Malampaya is held by the Philippine National Oil Company-Exploration Corporation (PNOC-EC), which in December last year retracted its consent to the sale.

Last October 2021, a group filed a graft complaint against Cusi, other DOE officials, and Uy in connection with the deal. Cusi then filed separate libel complaints against seven news organizations, including Rappler, for reporting on this graft complaint.

The Malampaya gas-to-power project is among the Philippines’ most valuable natural resource, supplying natural gas to five power plants with a total capacity of 3,211 megawatts. Six out of 10 households in Metro Manila and nearby provinces are powered by Malampaya. It also provides significant income to government, totaling P290.8 billion from 2002 to 2021. – Rappler.com

Ralf Rivas

A sociologist by heart, a journalist by profession. Ralf is Rappler's business reporter, covering macroeconomy, government finance, companies, and agriculture.