Govt looks into Petron offer to sell its refinery

Government is now evaluating the offer of Petron Corp. to sell its refinery in Bataan, but with a view to softening the impact of a supply shortage in the oil industry in case Pilipinas Shell decides to downsize its Philippine operations, an Energy official Said Friday. Buying Petron’s refinery in Bataan is “really an expensive option. We may have to push our balance sheet to do it," Energy Secretary Jose Rene Almendras told reporters in an interview. Pilipinas Shell Petroleum Corp. is not happy with business in the downstream oil industry and may further downscale its investments in the Philippine, including shutting down its refinery, Almendras. "These guys are not as happy as they used to be here... You cannot push them too far, you cannot push it too much because if you push it too much then people are really just going to say, ‘Why are we here in the Philippines? let's go somewhere else," the Energy chief said. "I have not received official communication, but if they decide to, it's an option they have. Maybe the other guys are thinking of the same reason, they now want to, they're willing to let go of their refineries. There are business decisions that they have to make," he added. Keeping doors open to Petron's offer Government is keeping its doors open to Petron's offer, the Energy official noted, saying there will be further discussions with other members of the Cabinet next week. “So far, among the conversations I've had with a few people from government... the problem is if we go this way, we have to give up something and we have been trying to stimulate investment to insulate the economy from going down. In the order of priorities for the resources there are other things that need these resources, the money," he said. Petron chair and CEO Ramon Ang offered to sell the refinery to the government in the wake of allegations that oil companies are overpricing its petroleum-based products including gasoline. But Almendras said prices in the Philippines are “more transparent than in other countries… I cannot stop people from criticizing, but at the same time I ask, ‘How come fuel pricing in other countries is not as controversial or politicized as it is in the Philippines?’" he said No valuation of the Petron refinery has been made, but the company said its has invested around $400 million in it. The total cost of upgrading the facility in Bataan to enhance Petron's capability to supply the local market with petroleum products is about $1.8 billion, the company said. Cabinet officials not convinced Cabinet members are not convinced that buying the refinery is a good thing for government. "I talked to a few people. And clearly from the finance guys, the response is we don't have the money or resources. If we decide to buy back these facilities then we would have to cancel some schools, hospitals and some infrastructure projects elsewhere to which President Aquino has already said that he wants to prioritize the people investment component of his administrative budget," Almendras said. There were those who also asked why government would want to go back and run the refinery when it has been proven that the state is not good at running a business, the Energy official noted. "I guess in other countries, the option about government running a business is slightly better but we had a very bad history on that. Thats' why we had the Electric Power Industry Reform Act of 2001 and the government decided to unload a lot [of assets]," he added. — VS, GMA News