"The government should stop using Petron as a leverage to control oil prices and instead, pursue its full privatization and use the proceeds to bankroll upstream activities such as oil and gas exploration. That way, the country could lessen its dependence on imported fuel sources," said Fernando Martinez, chairman of the Independent Philippine Petroleum Companies Association (IPPCA). The IPPCA groups the country’s smaller oil companies which include Eastern Petroleum, Flying V and Seaoil.
Petron, meanwhile, is 40-percent owned by the state-run Philippine National Oil Company (PNOC). Another 40 percent is held by Saudi Aramco while the remaining 20 percent is publicly-owned, as Petron was listed at the Philippine Stock Exchange (PSE) in 1994.
IPPCA said the fact that Petron is still partially-owned by the government through PNOC puts other existing players in the local oil industry at a disadvantage.
"We might as well go back to a regulated regime if government wants to maintain its stake in Petron. Its presence, for one, has undermined our operations because while we operate based on market forces, Petron is driven by other considerations. Moreover, despite being owned by government, this has not stopped surging oil prices, so there is no guarantee that oil prices will go down either with a partial or full ownership," he added.
Martinez said Petron’s remaining shares, if disposed through another public offering, will also give the sluggish stock market a major boost to bring back both local and foreign investors with the financial muscle to perk up the market.
"The long-term implication of Petron being in the hands of the government is that this tends to dampen the capital market and as a result, this also clouds the prospects of other oil companies such as Shell and Caltex which are mandated to go public," added Martinez.
The government’s sale of its 40-percent stake in Petron is being considered as one of the revenue enhancement measures of the Arroyo administration but Energy Secretary Vincent Perez has said that he will oppose the plan.
"The sale of Petron shares of the government has been discussed as one of the options to raise much-needed revenues but it is not under consideration. We will object to it," Perez said.
He said PNOC is satisfied with Petron’s strong performance.
"It has been performing well. "We believe that PNOC’s stake is a strategic investment. We are very pleased with its performance," Perez said.
Petron remits 40 percent of its income as dividend to the government every year. In 2002, Petron remitted P640 million, P560 million in 2001, P960 million in 2000 and P1.2 billion in 1999. The company did not say how much dividend was remitted to the government in 2003.
Petron, which holds a 37-percent market share, posted a net income of P1.4 billion in the first semester of 2004 as against P1.3 billion in the same period last year.
It expects its earnings to improve to P3.3 billion this year from P3.1 billion in 2003. The company hopes to increase market share to 40 percent by yearend.