A tycoon and close associate of outgoing President Duterte plans to sell businesses worth billions of dollars, including the South China Sea Malampaya gas field and a commercial land lease firm at the site of the former US military base in Clark that he all acquired in controversial fashion during Duterte’s term.
Sen. Sherwin Gatchalian, chairman of the Senate Energy Committee, said the sale could result in a power supply crisis for the country.
The Senator expressed grave concern over the country’s power situation following reports that businessman Dennis Uy of Udenna Corporation may sell his shares in the Malampaya deep water gas-to-power project.
“With the expiration of Malampaya’s service contract in 2024, the depletion of the remaining reserves in the gas field by 2027, and now the possible sale of participating interests of Udenna in the country’s most important energy source — there’s so much uncertainty ahead of us insofar as our energy security is concerned. Are we looking at rotational brown-outs again?” Gatchalian wondered aloud.
Chevron Malampaya, which was renamed UC38 LLC, sold its 45-percent stake to the group of Uy. The deal was approved by the Department of Energy (DOE).
Uy, chairman of conglomerate Udenna Corp. and listed Chelsea Logistics, has seen rapid growth and diversification of his business empire during the six-year presidency of Duterte, who leaves office next month.
The assets he is considering selling are the Malampaya gas field, which Uy had acquired from Chevron and Shell for approximately $1 billion, and Clark Global City, which also cost $1 billion.
Interested buyers had been reportedly looking at prospects for some of Uy’s other businesses, including oil retailer Phoenix Petroleum and his new telecom firm DITO, plus schools and food businesses he operates.
It was not immediately clear why Uy, the top campaign contributor to Duterte’s 2016 presidential run, was putting the assets up for sale. His representatives did not immediately respond to requests for comment.
The 48-year-old Uy is one of the country’s leading entrepreneurs, whose appetite for risk and acquisitions saw him build the bulk of his empire in just a few years.
Udenna Corp. nearly quadrupled its portfolio to more than 100 firms in the first four years of the Duterte presidency, in sectors from gaming, shipping, education and construction to fast food, ferries, tourism, telecoms and sports cars.
The company has long insisted it received no preferential treatment under Duterte and all businesses and contracts were acquired fairly. One of the interested buyers then asked, does Uy plan to get out once Duterte steps down?
Included in the preferred bidders for deals for Malampaya and Clark Gateway — the developer and landlord of a 177-hectare business district near Clark international airport — is billionaire Enrique Razon Jr. The transactions have been reported to be in the works for “some months already.”
Razon, Philippines’ third richest man with a net worth of $5.8 billion based on a Forbes ranking, did not immediately respond to a request for comment.
His Bloomberry Resorts announced it had signed a deal to invest in Uy’s integrated casino-resort projects in Clark and the central province of Cebu.
The Malampaya gas field fuels power plants that deliver about a fifth of the Philippines’ electricity requirements. In December Uy’s Udenna said Malampaya may operate for several more years beyond its projected 2027 project life.
The proposed assets sales come after the pandemic decimated the profitability of many of Uy’s businesses.
Udenna’s total liabilities rose by nearly half to PHP254 billion in 2020 from PHP171 billion in 2019, latest available data from the corporate regulator showed.