Senators seek filing of cases against Cusi, DOE aides over Malampaya deal

Senators passed a resolution calling for the filing of criminal and administrative cases against Energy Secretary Alfonso Cusi and his subordinates at the Department of Energy. (File photo from Malacañang)

MANILA, Philippines — Senators on Wednesday called on the Ombudsman and the Civil Service Commission (CSC) to file criminal and administrative charges against Energy Secretary Alfonso Cusi and his subordinates in the Department of Energy (DOE) for the allegedly anomalous approval of the sale of the controlling stake in the Malampaya gas project to an ally of President Rodrigo Duterte.

Saying the DOE decision endangered the country’s energy security, the lawmakers issued a resolution wherein the Senate expressed its sense of urgency that charges be filed against Cusi and 11 other DOE officials involved in the approval of the sale by Shell Philippines Exploration (SPEx) and Chevron Corp. of their 45-percent stake each in the Malampaya gas-to-power project to Udenna Corp. of Davao-based businessman Dennis Uy, the biggest campaign contributor of Mr. Duterte when he ran for president in 2016.

The Inquirer tried to get the comment of the DOE and Cusi, but they have yet to respond. Ruy Rondain, Cusi’s legal representative who drafted the energy chief’s legal complaint against several media people for allegedly reporting “libelous and false statements” against DOE officials regarding the Malampaya deal, said he has not heard or seen Sen. Sherwin Gatchalian’s speech.

Udenna also said in a statement on Wednesday that it continued to stand behind its earlier statements that the transaction with Chevron was a private sale of shares and “as such, (DOE) approval is not required. To add, the Chevron transactions followed competitive bidding processes with rigorous due diligence conducted by Chevron, the international lenders involved and the other parties in the consortium.”

Gatchalian speech

The senators took off from the privilege speech of Gatchalian detailing the “red flags” that his committee found in the approval of the Malampaya sale, and urged Cusi and his subordinates to immediately resign.

“I call on Secretary Cusi and his erring subordinates to immediately resign. With all that has happened, the Filipino people can no longer trust you to faithfully safeguard our country’s precious energy resources,” Gatchalian said.

He said he was making the speech as a preliminary report on the findings of the Senate committee on energy, which he chairs, following its probe into the $565-million (more than P40 billion) Chevron-UC Malampaya deal. UC Malampaya is an “indirect subsidiary” or a “great (grandchild)” of Udenna.

Chevron and UC Malampaya reached an agreement on the sale in 2019 and this was approved by the DOE in early 2021. SPEx, the other major shareholder, announced in May last year that it had signed an agreement with Malampaya Energy XP Pte. Ltd. (another subsidiary of Udenna), on the sale of its 45-percent shareholding for at least $380 million.

The state-owned PNOC Exploration Corp. holds the remaining 10-percent stake in the project.

Located off northwest Palawan, the Malampaya field fuels five power plants on Luzon with a combined capacity of 3,200 megawatts. The DOE had said the gas field’s reserves were expected to be commercially depleted by 2027.

Gross negligence

According to Gatchalian, Cusi and his DOE subordinates were liable for “gross neglect of duty and grave misconduct in evaluating and approving the transaction,” and alleged violation of the Anti-Graft and Corrupt Practices Act “for knowingly approving the transfer” of the 45-percent participating interest in Service Contract 38 to UC Malampaya.

“[UC Malampaya is] an entity that is clearly not qualified, and in so doing providing [it] an unwarranted benefit, advantage, or preference through manifest partiality, evident bad faith, or gross inexcusable negligence in evaluating and approving the deal,” he said.

Gatchalian questioned the inconsistent position of the DOE on the applicability of Presidential Decree No. 87 and DOE Department Circular No. 2007-04-0003, which required that any transfer of interest in the government’s energy assets required prior government approval, which should weigh the legal, technical and financial capability of the transferee.

“The (DOE) violated not only the law, but even its own department circular, in railroading the approval of the transfer of a substantial participating interest in Malampaya—our country’s single-most important energy resource—to a company that the DOE knew to be financially unqualified to own it,” he said.

Gatchalian noted that the DOE made a “180-degree turn” from such a position late last year after a financial evaluation of UC Malampaya found that it has a negative $137.2 million (-P6.9 billion) working capital.

“It is clear that UC Malampaya lacks the financial capability to handle such a very important investment in our country. How can we put our energy security at stake in a company that does not have the money to operate it?” the senator asked.

“The law is the law. Anyone who violates it must be punished to its full extent,” Gatchalian said.

Opposition

After Gatchalian’s speech, Senate Minority Leader Franklin Drilon moved to adopt the entire speech and make it an integral part of a resolution expressing the sense of the Senate, fearing that the committee might run out of time to formally file the committee report with just two session days left before Congress goes on recess again on Thursday.

However, Drilon’s motion lost, with 10 affirmative, 6 negative votes, and 4 abstentions failing to secure a majority decision of the senators present, according to a ruling by Senate President Vicente Sotto III.

Senate Majority Leader Juan Miguel Zubiri said he was against Drilon’s motion as he did not agree with Gatchalian’s call for Cusi and other DOE officials to resign.

Senators then decided to adopt a resolution expressing the sense of the Senate urging the Ombudsman and the CSC to file charges against the DOE officials. Senators Zubiri, Ronald dela Rosa, Francis Tolentino and Bong Revilla abstained.

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