DoE confused on ‘approval process’ of Uy’s Malampaya stake acquisition

By Myrna M. Velasco – September 7, 2021, 5:14 PM
from Manila Bulletin

The Department of Energy (DOE) has displayed its sense of ‘incertitude’ or ‘confusion’ when two officials of the agency gave conflicting answers to a question on what is the agency’s process of approving the Malampaya stake acquisition of Udenna Corporation, a company of Davao businessman Dennis Uy.

In a recent Congressional hearing, Energy Undersecretary Donato D. Marcos indicated that the DOE steps in to approve the acquisition, after the sale is already consummated by relevant private parties in the transaction.

“By their own joint operating agreement, they will do the transaction. Then after it’s finalized, we will review their compliances and we have a Department Circular (DC No. DC2007-04-0003) as basis for that,” he said.

The energy official was responding to a query raised by Party List Representative Ferdinand Gaite during a Congressional hearing on the DOE’s budget allocation for 2022.

However, Atty. Cesar Dela Fuente III, director of the DOE’s Energy Resource Development Bureau (ERDB) clarified that the DoE shall step in and review the documents before the parties would even finalize the sale transaction.

“What is provided in our Circular is: there should be prior approval of the DOE. And what we are reviewing is the qualification of the transferee – and that shall cover its financial and technical qualifications,” Dela Fuente stressed.

The clashing responses from the DOE to the query thus prompted the lawmaker to point out that the energy officials seem ‘clueless’ as to the approval process that they shall uphold relative to the sale of the Malampaya stake to Udenna.

Dela Fuente reiterated that the sale of the 45-percent Malampaya shareholdings of American firm Chevron to Udenna Corporation was already approved by the DOE last year; and the remaining transaction that they will need to review is Shell’s divestment of its 45-percent stake in the gas field project.

“The first transfer from Chevron to Udenna, that’s already done and they (Udenna) are compliant. What we are evaluating now is the transfer of Shell’s share to Udenna,” he noted.

From the outcome of previous Congressional investigations, it was apparent that the DOE just interceded to approve the US$565 million sale of Chevron’s equity to Udenna after the parties have already finalized the sale; and payment to the American firm-seller was already remitted.

In the case of Shell’s US$460 million Malampaya stake divestment, the energy department already required review of the documents and the compliances of the parties – that’s even before reaching the financial closing of Udenna’s Malampaya Energy XP Pte. Ltd. and Shell as targeted by December this year.

At this stage, the DOE was just instructed by Congress to submit the documents that became the basis of its first approval of the transfer of the Chevron-Malampaya shareholdings to Udenna.