MANILA, Philippines – The Aquino administration is not keen on the offer of Petron Corp. for a possible buyback of the Bataan refinery as an option for the government to combat high oil prices, the country’s top energy official said.
Energy Secretary Jose Rene Almendras told a press conference yesterday that while the government is not completely closing its door on the offer, “it’s not the priority of the Aquino administration at the moment.”
“As far as our response is concerned, I talked to a few people. Clearly from the finance guys, the response is we don’t have the money or we don’t have the resources for this. If we decide to buy back these facilities then we will have to cancel some schools, hospitals, infrastructure projects elsewhere, which President Aquino already said he wants to prioritize – the people investment component in this administrative budget. It was clearly explained that President Aquino would rather spend the money on things that will directly benefit the people and that are absolutely necessary to create that safety net for the disadvantaged,” he said.
Almendras said they would further take up this matter during the economic managers’ meeting middle of next week.
“It’s not with finality that I am saying no to it, I hope to discuss this in next Wednesday’s economic managers’ meeting,” he said.
Petron chairman and chief executive officer Ramon Ang earlier said in a letter to Almendras that it is high time for the government to “reinvest” in Petron.
“Public opinion urging the government to reinvest in Petron as a means to attain effective participation in the industry has reached us. The company is open to this idea. In particular, we are ready to offer our refinery assets (the Petron Bataan Refinery Complex in Limay, Bataan) for possible re-acquisition by government if this will assist in attaining the government’s objectives at this time,” Ang said.
Almendras said he has not formally replied to Petron’s offer and will wait until he has talked with the rest of the country’s economic team.
“On the contrary, with my discussions with Ramon Ang, he specifically mentioned the reason why they made this offer is to really show their support to the government. Ang made it clear this is not a threat to government. There are two reasons why the proposal was made – they are no longer happy despite the fact that domestic oil prices are one of the most transparent and one of the most lowest, except to the subsidized environment, and there are still people who continue to agitate the big oil companies alleging them of taking advantage of consumers. He also said that some people think the downstream oil business is a good business and is very profitable such that we want to keep our profits. By making this offer, we want to send a very clear signal that if anyone wants to take over we will give it to them. In the past few weeks a lot have been asking for the re-regulation of the downstream oil industry, and some people have reacted that we don’t need to go re-regulate, and even the legislators agree. They also wanted to express their opinion that to reverse deregulation is actually not the way to go,” Almendras said.
The energy official, however, said the government may “rethink” Petron’s offer in case the other refiner Pilipinas Shell Petroleum Corp. decides to shut down its refinery.
“If it boils down to the fact that all the oil companies will decide to pull out from the Philippines because we’re not an ideal investment destination, because we’re not an ideal operation center, then that’s the time the government has to step in,” he said.
It would be noted that Shell has been postponing its refinery expansion program and its planned initial public offering (IPO) in the wake of a series of problems it has been encountering with the government such as its tax evasion cases, the shutdown of the Pandacan oil depot and oil pipeline leak.
At present, there are only two oil refineries in the Philippines. Petron, which was bought by San Miguel Corp. from the Ashmore Group in 2009, runs an 180,000 barrels-per-day refinery in Limay, Bataan; and Pilipinas Shell which operates a 110,000-barrels per day refinery in Tabangao, Batangas.
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By: Donnabelle L. Gatdula
Source: The Philippine Star, Oct. 15, 2011
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