Bare Truth by Rose de la Cruz
Bare Truth

Is Dennis Uy’s star waning?

Nov 27, 2021, 3:56 AM
Rose De La Cruz

Rose De La Cruz

Columnist

AFTER five years of hitting gold wherever he went, Dennis Uy, founder of Udenna, a conglomerate with interest in petroleum, oil and gas, shipping, logistics, real estate, education and gaming- is being badgered left and right.

His biggest source of headache this year is the filing before the Ombudsman of a graft case against his Udenna, which acquired without the benefit of bidding—the 90 percent stakes of Shell Philippines and Chevron in the Malampaya natural gas field in Palawan.

But his problems keep mounting by the months—this time his Lumbo Spring Bulk Water Supply project in Dolores, Quezon is being protested vigorously by farmers, the National Irrigation Administration and the local governments of Dolores and Tiaong, which said the project will cause water supply shortages and disrupt the livelihoods in the province.

Is his lucky star--- courtesy of his closeness to the sitting president whose campaign he funded substantially in 2016—waning and will its light completely go off when his patron gets replaced in June 2022?

Liquidity problems mount

Despite his heavy indebtedness—with most of his projects, undertakings and ventures—funded from loans, it makes me wonder how come he continues to get loans from banks despite his limited cash flow.

And he keeps acquiring, Pacman style, companies and ventures that otherwise were in more stable hands before he took them.

His acquisition of Malampaya (which supplies 40 percent of our energy mix) from Shell and Chevron (making him 90 percent owner of the project and facilities) worth $565 million is said to have cost losses for the Filipino people of P138 billion, 17 times larger than the Pharmally deal for face shields and other medical supplies which is still being investigated in Congress.

Last March, Uy’s Chelsea Logistics and Infrastructure Holdings Corp., owned by Uy, sold his 31.73 percent stake in 2Go Shipping to SM Investments Corp., giving SM a controlling stake in 2Go.

Valued at P6.64 billion, he used this sum to cut losses and relieve pressure form mounting debts.

Back then, Chelsea said the proceeds of that sale will be used “to pay down the loan obtained for the acquisition of the shares,” the Inquirer reported.

In 2017, Chelsea signed a $220 million loan with Bank of China to acquire its 2Go stake.0:12

The deal further eases pressure on Chelsea, which recorded a net loss of P367.2 million from its 2Go stake during the first nine months of 2020.

Chelsea’s overall losses for the period hit P2.6 billion, reversing profits the previous year, as operations were severely impacted by the global health crisis.

“With the divestment, Chelsea will not be impacted by 2GO losses, which will aid the company in recovering from the current COVID-19 pandemic,” Chelsea Logistics president and CEO Chryss Alfonsus V. Damuy said in a stock exchange filing.

The company provides passenger and cargo shipping, warehousing and distribution, cold chain solutions, domestic and international ocean, and air forwarding services, customs brokerage, project logistics, and last-mile package and e-commerce delivery.

Casino next

Last October 7, I wrote about Uy asking for the suspension of his provisional license for a casino in Clark Freeport Zone focusing instead on his P600 million Emerald Bay and Resort Casino in Cebu.

This, after his company’s first half net loss widened to P175.6 million from P134.3 million last year.

Because of low occupancy rate of his business venture, Donatela Resort & Santuary in Bohol because of the pandemic, his net operating revenues declined by 78 percent to P2.1 billion.

The voluntary suspension allows the PH Resorts Group Holdings Inc. (PHR) his casino holding company to ramp up and focus all efforts for the construction and development of its flagship integrated resort and casino project in Mactan.

"As present financial projections center on PHR's plans for the Emerald Bay project, the voluntary suspension of CGLC's license will have no effect on current financial numbers. Thus, PHR expects that the suspension will have little to no impact on the business of PHR," the disclosure to the Philippine Stock Exchange stated.

PHR’s capital is P1.2 billion in deficit and its net liabilities have increased to over P7.2 billion as of June. Its biggest creditor, China Banking, gave Uy until September 14 to agree on a bailout of its P5.9 billion loans after three extensions.

Water, his newest headache

Five days ago, traditional and social media were filled with stories about the protest of farmers, NIA and local governments over Uy’s Lumbo Spring Bulk Water Supply project.

“There is a clear threat of irrigation water shortage due to the increasing number of water users both for domestic and agricultural use. The proposed project and the continuous decrease of water discharge will jeopardize the government’s thrust toward food security and will decrease farmers’ potential income,” NIA earlier said.

Tiaong's local government mentioned it received concerns from farmers that the project will negatively impact their livelihood and food production

To be specific, San Pablo City Water District (SPCWD) of Laguna Province and Dolores Water District (DWD) of Quezon Province entered into a 25-year agreement last year for the water supply and development and rehabilitation of Lumbo Spring.

Then in November, SPCWD and DWD jointly issued a Notice of Award for the Lumbo Spring Bulk Water Supply Project to a consortium led by Udenna Water Integrated, Inc.

The consortium – which is composed of Udenna Water, Spanish firm Inclam, S.A., and Optimus Engineering and Construction – was tasked to construct a facility to draw about 12 million liters of water daily from Lumbo Spring, which will mostly be diverted and sold to users from San Pablo, Laguna.

Udenna Water is part of the Udenna Group of Companies, which is owned by Davao-based businessman Dennis Uy.

The P103-million project will draw 12 million liters of water daily from the Lumbo Spring in Dolores, Quezon for 25 years. 10 million liters will be diverted to users in another city, San Pablo, Laguna. Only two million liters of water shall be for the use of the municipality of Dolores, Quezon.

Sen. Francis Pangilinan, former food security chief, filed a resolution for the Senate to express support for local farmers, the National Irrigation Administration (NIA), and the local governments of Dolores and Tiaong, who are all against the project by the Davao-based corporation owned by the friend and campaign donor of President Duterte, Dennis Uy.

Though the issue involving water supply in the province of Quezon is local, water supply is a national security concern like the Malampaya gas reserves. Assuring and ensuring food and water supply is the fourth agenda in the National Security Policy. The government is to address the causes of food shortages and safeguard access to quality water to preserve ecosystems and achieve development.

To protect their water reserve, the local farmers and NIA prevented Udenna a private company taking over their water supply.

Advocacy group Mamamayan Para sa Kapakanan ng Kalikasan ng Bukal ng Lumbo supports the position of other organizations, saying the water supply project will only benefit a few sectors at the expense of people living in downstream communities.

In a position paper submitted to Tiaong Municipal Mayor Ramon Preza, the office of NIA in Region IV-A expressed “its strong opposition” to the continuation of the P103-million Lumbo Spring Bulk Water Supply Project.

NIA IV-A claimed that the bulk water supply project will directly affect Lagnas River, which is one of the tributaries of Lumbo Spring.

The Lagnas River Irrigation System currently serves seven Irrigators Association, which has a total rice area of 696 hectares and 388 farmer-beneficiaries.

“There is a clear threat of irrigation water shortage due to the increasing numbers of water users both for domestic and agricultural use,” said the position paper signed by Fidel Martinez, a division manager at NIA’s Quezon Irrigation Management Office.

As part of the deal, the consortium will design, construct, and install raw water intake structures, treated water reservoirs, conveyance systems, pumping stations, metered interconnections facilities to SPCWD in Laguna and DWD in Quezon.

The PPP Center has provided the water districts technical assistance in the development and procurement of the project.

In NIA’s position paper, Martinez said the proposed project “will jeopardize the government’s thrust towards food security and will decrease farmers’ potential income.” “Also, time will come that irrigation facilities will no longer be used to its functions as the aforementioned project threaten the farmers to sell and convert their rice lands,” he further said.

Prior to NIA’s position paper, Preza already made an earlier statement revealing farmers’ concerns about the possibility of a further slowdown or reduction of water flow to their rice fields because of the bulk water supply project.

He also said that the reduction of water supply and gradual stoppage of its flow in the rivers has already been observed, which will have a significant impact on the cultivation of rice, high-value crops, and animal husbandry in more than half of the barangays of Tiaong.

Preza then appealed that before any resource extractive activity is undertaken, which will affect users downstream, there should be a public consultation wherein all stakeholders, including those downstream, are given the opportunity to discuss their concerns.

He also noted that the City of San Pablo is rich in bodies of water that its local government can use for domestic purposes of its constituents.

“Although drinking water is also one of the basic human needs to survive, our town strongly believes that there are other sources which the San Pablo City Water District can use to meet their needs, the Tiaong mayor said.

“Therefore, we strongly pray for the non-extraction of Lumbo Spring for the sufficient supply of water to sustain the irrigated rice area of Tiaong, Quezon,” he added.

Pray tell, how many more ventures of Uy will encounter opposition, losses and collapse in the coming years.


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