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Business

Tears for Dennis Uy, Udenna

EYES WIDE OPEN - Iris Gonzales - The Philippine Star

The camp of Davao-based Dennis Uy broke its silence on the controversies surrounding the Malampaya deal, defending the group’s acquisition of a 90 percent stake in the country’s energy crown jewel, the Malampaya deep water gas-to-power project.

In a recent virtual briefing, Udenna Corp. president Raymundo Martin “Marty” Escalona, defended Uy and the group and answered the issues raised against the controversial Malampaya deal. Uy was not present during the press conference, but Escalona explained the transaction in length.

Escalona is perhaps one of Uy’s most loyal and trusted lieutenants from way back. After a long career in banking, he joined Uy’s group some 14 years ago because he considered Uy as an “honest, hardworking, and apolitical businessman.”

He talked about the struggles and challenges Uy faced in the past, including the smuggling issue raised by the previous administration. This could not have been true and were proven as such, Escalona said, adding that Uy was named top taxpayer in Davao around that time.

Rhyme and reason

Escalona then went on to explain the “exponential growth” of Uy’s business since the start of the Duterte administration. It was simply because Uy was more hopeful with the economy and believed that business endeavors would ?ourish in the Philippines with President Duterte, his friend from Davao, at the helm.

This was the backdrop of the rise in investments of Udenna to pursue more business opportunities, Escalona said. It’s the “rhyme and reason” for Udenna’s growth.

Perhaps, it was a much needed relief for Uy when his pal from Davao was voted into the highest position of the land after dealing with smuggling issues during the administration of former president Benigno Aquino III.

“Dennis Uy believes in the Filipino. He is always guided by his vision to take on the task of pursuing a business not just for monetary gain, but for nation building. He truly aims to positively contribute to our country’s economy and uplift the lives of Filipinos. His investments are risks he is willing to take, risks for the Filipino,” Escalona said.

The deal

This was how Escalona explained the deal in a nutshell, and why, he insists, there is nothing wrong with it:

“Both the Chevron and Shell transactions are private share sales conducted at parent company level, with no change in the legal entities participating in the Service Contract 38 consortium nor any transfer of any rights or obligations. As such, the (Department of Energy) approval is not required. Section 16.4 of the SC 38 Agreement and Section 1 of the DOE Circular executed under PD No.87 do not apply to these transactions.

“The deals were awarded based on having the most compelling tender, demonstrating robust technical, ?nancial, and legal capabilities, and a commitment to retain Chevron and Shell staff.”

All the accusations – from being a midnight deal to being riddled with graft – are downright unfair and have been very destructive to Uy, the Udenna Group, its employees and their families, Escalona said.

At this point, he broke into tears, saying that it has affected the group’s ability to financially close pending transactions.

“It’s affecting the livelihood of thousands of our employees,” Escalona said.

Not a crony

A complainant who filed a graft case against Uy, Energy Secretary Alfonso Cusi, and other government officials called it “the most incredible crony deal’’ in the country’s history.

But Escalona insists that Uy is no crony of Duterte, noting that Uy would not have hired him because he headed the campaign of Grace Poe during the 2016 presidential elections.

Moving forward, Escalona said the group would not be distracted and would focus on rejuvenating Malampaya after a seven-year hiatus in exploration activities.

“At the core of the program is a planned drilling campaign in the SC 38 license area to add reserves and extend the life of the asset. At the same time, Malampaya Energy will evaluate well and implement production enhancement technologies to improve recovery from the main Malampaya field in the near term,” he said.

Udenna’s efforts to address the issues are very much appreciated.

“We have not violated any law. We strongly believe that there is a need to regard the rule of law and put importance on contract sanctity. This flippant attitude by some parties toward contract sanctity will further hurt any investment and exploration by international upstream companies in the Philippines,” Escalona said.

The next step is for the group to prove all these in court if the case prospers. Complainants would also have to prove that there was, indeed, graft involved.

As I’ve noted before, a sticky point really is the Malampaya extension, which Shell and Chevron have been working on for years but did not get.

The administration would have to prove there was no conspiracy to boot out the two global players from the consortium by not extending the contract.

At the end of the day, Malampaya is a critical power asset that should continue to benefit Filipinos.

Anything that delays its rejuvenation -- whether it’s the controversies, the case, lack of financing, mismanagement or graft, if proven – would negatively affect our power supply.

We’re already hearing warnings of power outages next year. If that happens, that would no doubt be a major tear-jerker.

 

 

Iris Gonzales’ email address is [email protected]. Follow her on Twitter @eyesgonzales. Column archives at eyesgonzales.com

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