MANILA - Udenna’s acquisition of 90 percent of the Malampaya gas project was not a “sweetheart deal” between the government and Davao-based businessman Dennis Uy, a top Udenna official said on Thursday.
Udenna, through its subsidiaries, acquired a 90 percent stake in the Malampaya project by buying the 45 percent stake of Chevron for $565 million, and another 45 percent stake from Shell for $460 million.
Udenna President Raymundo Martin Escalona said both Chevron and Shell are international oil and gas firms that cannot be swayed by a mere call by Uy.
"There were a lot of bidders. Do you think Udenna, being one with meager resources will be able to coerce Chevron and Shell?,” Escalona said during an informal virtual briefing with the business community and the members of the press
Escalona insisted that both deals went through bidding involving over 25 other firms which are mostly foreign.
"Both Chevron and Shell transactions follow highly competitive bidding processes with rigorous due diligence conducted by both global oil and gas companies," he said.
He added that both the Chevron and Shell transactions are also private share sales with no change in legal entities or transfer of rights or obligations, which does not require approval from the Department of Energy.
Business groups, lawmakers, and other concerned groups meanwhile are questioning the deals. Uy and Energy Secretary Alfonso Cusi are facing graft complaints before the Ombudsman because of the deal.
Udenna’s Malampaya acquisition was also called the "most incredible crony deal” in history.
Critics of the deal said the Department of Energy, through the Philippine National Oil Company, should have exercised its right of first refusal and bought the stakes of Chevron and Shell.
This would have given the government full control of the vital energy facility, they said, along with all of the profits from the project.
By not exercising this right, the government had abandoned the country’s interests, they said.
Senate Committee on Energy chair Senator Win Gatchalian meanwhile has called the sale of Chevron’s stake to Udenna as “lutong Macau” or rigged.
Udenna’s Escalona denied all of this.
"We are being accused of this being a sweetheart deal from the government but I tell you again, if you don’t know the facts, I encourage you please, get the facts and history of Malampaya. This is certainly not the first time where share sale transfers were done," he added.
Gatchalian also said Udenna's UC Malampaya "has negative working capital."
But Escalona said the two Udenna entities acquiring shares in Malampaya, namely UC Malampaya Philippines and Malampaya Energy XP, have a combined capitalization of $191 million.
On allegations that PNOC’s non-participation in the bidding was a loss for the government, Escalona said the government currently gets 64 percent of Malampaya’s revenues, while the rest goes to the consortium where the expenses are charged.
If PNOC bid for the Chevron and Shell shares, it would get less than the 60 percent since it would also be subject to expenses, he said.
"At the end of the day, without doing anything the government enjoys 64 percent of Malampaya revenues... Over the years Malampaya has contributed around $12 billion to the government in revenues and that's a substantial amount of money," he said.
An emotional Escalona said the accusations against Udenna have affected the company’s financial deals, as well as the livelihood of thousands of employees.
“It’s already affecting my and the group’s ability to be able to financially close pending transactions,” he said.
“It’s affecting the livelihood of thousands of our employees…You’re talking about people with families and it’s really not fair,” he added.
Malampaya supplies fuel to three power plants that provide up to 30 percent of Luzon’s power needs.