PNOC-EC defers sale of Malampaya stake

The state-run Philippine National Oil Co. - Exploration Corp. (PNOC-EC) has deferred anew the sale of its 10-percent stake in the $4.5-billion Malampaya gas project.

PNOC-EC president Rufino Bomasang said the planned sale was put on hold again because government has not yet determined the most feasible mode of privatization for government’s stake in the project.

Originally, the sale was supposed to have been completed last year, but this was rescheduled for the first quarter this year to give PNOC-EC and ING Barings enough elbow room to iron out details related to the sale.

Bomasang said PNOC-EC hopes to firm up or finalize the privatization mode by April when ING Barings also comes up with the valuation of the shares.

Last year, PNOC-EC appointed ING Barings as the underwriter for the privatization of government’s 10-percent shares in the Malampaya gas project.

ING Barings was tasked with handling the second phase of PNOC-EC’s privatization. Previously, it was Credit Lyonaise that took charge of the agency’s first phase of privatization which was to come up with a valuation of the state-run firm..

PNOC-EC is studying several options for the sale of its stake in the Malampaya gas project which is worth around $200 million.

One option is to hold a secondary offering for its Malampaya shares, or sell its stake to current partners Shell Philippines Exploration and US-based energy concern, Chevron-Texaco. Each have a 45-percent share in the natural gas project.

Another option being considered is to create a holding company that would be PNOC-EC’s vehicle for the listing of the shares at the Philippine Stock Exchange.

The Malampaya natural gas reserve is located in offshore Northern Palawan. It is estimated to yield three trillion cubic feet of natural gas, capable of providing 3,000 megawatts of electricity.

The privatization of PNOC-EC was approved by the Privatization Council chaired by Finance Secretary Jose Isidro N. Camacho.

The planned privatization will shore up government’s swelling budget deficit. The sale is expected to generate $400 million.

Earlier, Camacho said government had received proposals from several investment banks to handle a bond issue to be backed by part of the $10 billion the government is expected to earn from the Malampaya project over the next 20 years.

"The Malampaya securitization is one of the things we want to do this year to offset revenue items that may not come in," said Camacho. However, he admitted that the National Government must first resolve a royalty-sharing dispute with the provincial government of Palawan.

Government also has to determine if the securitization will not violate provisions of the Electricity Power Industry Reform Act.