In a public hearing of the Senate Committee on Energy Wednesday, Gatchalian bared how Uy expanded his business empire through massive borrowings under the Duterte administration.
As an example of Uy’s lack of cash, Gatchalian noted that the company he used to buy Shell Philippines Exploration’s (SPEX) 45 percent stake in Malampaya, Malampaya Energy XP Pte. Ltd., had a measly paid-up capital of $100 or P5,000.
Uy plans to borrow from ING Bank, ANZ, Deutsche Bank and Farallon Capital to bankroll his $460 million purchase price for Shell’s 45 percent stake in the Malampaya project or Service Contract No. 38.
Gatchalian estimated that borrowings of Uy’s holding firm Udenna surged by 324.4 percent to P120.8 billion in 2019 from P28.5 billion in 2016 which he said was way higher than the growth of borrowings made by the country’s largest conglomerates.
“Based on news reports and balance sheets that we’ve seen, (it) seems to me that Udenna is encountering some financial challenges. And this doesn’t speak well on the purchase of a very important asset. And this asset is not only important in terms of potential, but also important in terms of energy security,” said Gatchalian
SPEX General Manager Don Paulino told the Senate that Uy’s offer was the “most compelling” they had received among the interested buyers.
But while Uy’s money was good for Shell, Gatchalian said Uy’s lack of expertise and track record in running a massive power project was too risky for the country.
“It might be best for Shell but it might not be the best for the country…Shell should’ve been more prudent in terms of choosing the right operator,” said Gacthalian.
Energy Secretary Al Cusi distanced himself from the sale of Shell’s stake to Uy, noting that this was a private transaction. But Cusi bared that his agency was reviewing Udenna’s capability to continue the development and exploration work of Malampaya over the next three years.