Dennis Uy’s Malampaya takeover faces re-evaluation

Davao City-based businessman Dennis Uy’s planned takeover of the Malampaya gas field in offshore Palawan is facing re-evaluation after a Senate inquiry questioned his company’s financial capability to bankroll the acquisition.

In a statement on Thursday, the Department of Energy (DOE) said it “extensively reviews” the Malampaya share purchase deal done by UC Malampaya Philippines Pte. Ltd., a subsidiary of Uy’s holding firm Udenna Corp., and Chevron Philippines Ltd.

“I have instructed our DOE officials to provide justifications of our legal, technical and financial evaluation with regard to the approval of transfer of the participating interest of Chevron to Udenna, pursuant to Petroleum Service Contract (SC) No. 38,” Energy Secretary Alfonso Cusi said.

"We will continue to exhaust all measures in thoroughly evaluating the legal, financial, and technical aspects of the transaction," Cusi said.

In March last year, UC Malampaya completed its buy-out of Chevron Malampaya LLC, now UC38 LLC, which has 45% participating contractual interest in SC 38 or the Malampaya gas field for $565 million.

The Energy department cleared the transaction in April.

Meanwhile, the re-evaluation of the transaction came after Senate Committee on Energy chairman Senator Sherwin Gatchalian alleged in a legislative inquiry that Malampaya Energy XP Pte. Ltd. - another Udenna firm - which won the bid for Shell Philippines Explorations B.V.’s 45% stake in Malampaya gas-to-power facility, only has a paid-up capital of $100 or about P5,000.

During the Senate hearing, Cusi said that the DOE has not evaluated yet the sale of Shell’s stake in SC 38 to Malampaya Energy.

The Energy chief said the agency will review the Shell-Malampaya Energy deal for 30 days after the parties involved submitted all the required documents.

On the other hand, despite ordering the re-evaluation of the Chevron-UC Malampaya deal, Cusi said that the DOE determined that the company has met the financial, technical, and legal qualifications.

In a separate statement, Udenna units in question Malampaya Energy and UC Malampaya said they have more than P10 billion in cash on their balance sheets.

“The funds include a recent shareholder advance of P750 million to Malampaya Energy, providing a ready source of cash on hand,” the companies said.

“In addition, records from the Department of Energy (DOE) showed Chevron submitted documents to the DoE showing UC Malampaya with a bank balance summary of $39.17 million or nearly P1.95 billion,” the companies said.

Since Duterte assumed the presidency in 2016, Uy, a known donor to the president's campaign kitty in 2016, has expanded his empire through several acquisitions and ventures, including the takeover of the Malampaya facility, which supplies a third of Luzon’s power requirements.

The Malampaya gas-to-power facility fuels three gas-fired power plants with a total generating capacity of 2,700 megawatts (MW), providing up to 30% of the power generation needs of Luzon.

Connected to onshore gas plants in Batangas, the Malampaya offshore facility in Northern Palawan was inaugurated in 2001.

The project has also provided a crucial source of income for the government with a total net national government share amounting to P261,681,610,752.59 since it began commercial operations in 2002 until 2019.—LDF, GMA News