Win urges Cusi to resign, recos charges over Chevron-Udenna Malampaya deal


Sen. Sherwin Gatchalian has called for the resignation of Sec. Alfonso Cusi and other current officials of the Department of Energy (DOE) for “railroading” the controversial sale of Chevron’s 45% stake in the Malampaya gas-to-power project to Udenna Corporation.

In his privilege speech on Wednesday, Gatchalian – chairman of the Senate Committee on Energy – also recommended to the Office of the Ombudsman and the Civil Service Commission (CSC) to file criminal and administrative charges against the said officials in connection with the sale.

The senator pointed out that the DOE violated not only Presidential Decree (PD) 87 or the Oil Exploration and Development Act, but also its own Department Circular (DC) – specifically DC2007-04-003

Based on the committee’s findings, UC Malampaya – an indirect subsidiary of Udenna – had a negative working capital of $137.2 million. Udenna owner Dennis Uy had insisted on having enough capitalization for the purchase of Chevron and Shell Philippines Exploration B.V.’s combined 90% share in Malampaya.

“[Allowing] a company in financial turmoil to own a large stake in Malampaya gravely endangers our country’s energy security,” Gatchalian said. 

“Oil and gas exploration and extraction is an expensive, high-risk industry. However, UC Malampaya is reliant on its earnings from Malampaya’s gas operations to pay its 45% share. If operations slow down, UC Malampaya would not be financially capable of paying its fair share of Malampaya’s operating budget,” he added.

Under PD 87 and the DC, the rights and obligations in petroleum service contracts (SC) –  like Malampaya’s SC38 – can be transferred from one entity to another, but only after the DOE has determined that the buying entity passes the department’s technical, legal, and financial evaluation.

However, Instead of disapproving the deal, Gatchalian said that the DOE bent backward to find a way to approve the transfer. Instead, the department evaluated UC38 LLC’s financial resources, and not UC Malampaya, to approve the deal. UC38 is a direct subsidiary of UC Malampaya, which in turn is an indirect subsidiary of Udenna.

“Noong nagsagawa ng legal at technical evaluation ang DOE, ang sinuri nila ay ang UC Malampaya, ang transferee sa naturang transaksyon. Pero ang sinuri nila pagdating sa financial evaluation ay ang UC38. Pakiwari tuloy ng marami, mistulang nahinog sa pilit ang Chevron-UC Malampaya deal at pinalusot na lang ito dahil walang duda na wala naman talagang kakayahang pinansyal ang UC Malampaya,” Gatchalian said.

In addition, Gatchalian pointed out that Cusi backtracked on earlier pronouncements saying PD 87 and the DC apply to the Chevron-Udenna deal.

“[Mismong] si Sec. Cusi ang nagsabi na kailangang aprubahan ng DOE ang bentahan ng Chevron at UC Malampaya bago maisapinal ito. Pero sinabi rin niya na hindi na kailangang dumaan pa sa DOE ang kasunduan. Ang nakakapagtaka, bakit pabago-bago ang isip ng DOE sa isang transaksyong [kasinlaki] nito?” Gatchalian pointed out.

Dati rin sinabi ng DOE na ang pag-apruba nila ay batay sa batas at [DC]. Pero nag-iba uli ang kanilang pahayag at sinabing base lang ito sa guidelines o benchmarks. In response, Sen. [Risa] Hontiveros said she was at a loss for words after seeing, for the first time, a law and a department circular being demoted to mere guidelines or benchmarks. I agree with her,” he added.

Gatchalian particularly recommended to the Ombudsman the filing of charges against Cusi for violating Republic Act 3019 or the Anti-Graft and Corrupt Practices Act. The senator also called for the filing of graft charges against Undersecretaries Donato Marcos and Roberto Uy; Asec. Gerardo Erguiza, Jr.; former Asec. Leonido Pulido III; Dir. Cesar De La Fuente of the DOE Energy Resource Development Bureau; Dir. Araceli Soluta of the department’s financial services unit; and Dir. Arthus Tenazas of the legal services unit; and five others.

Cusi and Udenna’s Uy are already facing graft charges filed by private citizens before the Ombudsman.

Gatchalian also recommended pressing administrative charges against Cusi, Usec. Uy, Erguiza, and Pulido for gross neglect of duty and grave misconduct under Executive Order (EO) 292, Series of 1987 or the Administrative Code of 1987.

The CSC was likewise asked to investigate, and if appropriate, to file administrative charges against De La Fuente, Tenazas, Soluta, and four others for their gross neglect of duty and grave misconduct, also under the same EO.

If found guilty, Cusi and the involved DOE officials would be perpetually disqualified from public office, and face six to 15 years in prison.

The law is the law. Anyone who violates it must be punished to its full extent. Kailangang managot ang mga opisyal ng DOE, sa pangunguna ni Sec. Cusi, dahil sa paglapastangan nila sa batas. Inaprubahan nila ang paglipat ng 45% participating interest ng Malampaya sa isang kumpanya na maliwanag na wala namang kakayahang humawak ng isang mahalagang imprastraktura ng bansa,” Gatchalian emphasized. 

Cusi, meanwhile, said he took note of the senator’s speech.

“I am mulling over a reasonable response to what he said to the media. I shall issue my response as soon as I get hold of the Senate resolution.”