Chevron-Udenna Malampaya deal once again questioned

win-dennis uy

Senate energy committee chairman Sherwin Gatchalian said the Department of Energy (DOE) “bent rules” instead of protecting the public to approve Udenna Corporation’s purchase of Chevron’s 45% stake in the Malampaya gas-to-power project back in March 2020.

At the committee’s hearing on Tuesday, Gatchalian slammed DOE officials, arguing that UC Malampaya Philippines — the Udenna entity that bought Chevron’s share — was packaged as the parent firm itself. The senator went on to say that for Udenna to be qualified, it was UC38 LLC that was evaluated.

Based on the internal evaluation of the DOE’s financial services unit, UC Malampaya and UC38 submitted an unsigned and unaudited financial statement covering the period from January 1 to September 30, 2020, while parent firm Udenna submitted audited financial statements covering from 2017 to 2019.

The evaluation then showed UC Malampaya having a working capital of negative $137.16 million. UC38, meanwhile, had $177.42 million.

Under DOE Department Circular (DC) 2007-04-0003, a firm up for evaluation has to submit audited financial statements and annual reports for the last three years, as well as specifics of financial resources available to the would-be transferee.

Based on documents gathered by Gatchalian’s office, Davao-based Udenna Corporation owns 100% of Singapore-based UC Energy Holdings Pte. Ltd., which in turn owns 100% UC Malampaya Holdings Pte. Ltd. — also based in Singapore. UC Malampaya Holdings Pte. Ltd. owns 100% of UC Malampaya Philippines, which owns UC38 LLC — the new name of Chevron Malampaya LLC following Udenna’s takeover.

Gatchalian asked DOE Financial Services Director Araceli Soluta if UC Malampaya would pass the financial test, but she could not answer directly. The Energy official maintained that the agency only focused on the members of the Malampaya consortium.

Later in the hearing, it was also revealed that the work program submitted to the DOE was not yet final. This shocked Sen. Nancy Binay, saying the department approved a transaction based on drafts.

The DOE approved the Chevron-Udenna deal back in April.

Other than Udenna, Shell Philippines Exploration B.V. (SPEX) currently owns the other 45% of Malampaya, while PNOC-Exploration Corporation holds the remaining ten percent on behalf of the government.

Udenna’s purchase of SPEX in May is also being looked into by the Senate. Pending the DOE’s approval of the deal, Uy would own 90% of Malampaya — the Philippines’ only major indigenous source of natural gas supplying a fifth of the country’s power needs.

Uy, Udenna’s founder and chairman, was a major contributor to the presidential campaign of then Davao City Mayor Rodrigo Duterte in the 2016 elections. Another Udenna unit, Chelsea Logistics Corporation, bought Starlite Ferries from the family of Energy Sec. Alfonso Cusi in 2017. Cusi would later become the richest member of the Duterte cabinet beginning 2019.