Independent oil players back mandatory listing of 10% of oil companies’ stocks

The Independent Philippine Petroleum Companies Association (IPPCA) backed yesterday the mandatory listing of oil companies at the Philippine Stock Exchange.

IPPCA chairman and Eastern Petroleum Corp. CEO Fernando L. Martinez said the oil firms should comply with Sec. 22 of the Oil Deregulation Act of 1998 which provides for the mandatory listing of at least 10 percent of its common stocks of all refining business within three years.

In a speech before the Financial Executives Institute (Finex), Martinez batted not only for the listing of Shell and former refiner Caltex but also for additional shares of Petron from 20 percent of outstanding shares to 40 percent, decreasing the government and Saudi Aramco’s shares to just 30 percent each.

Martinez also said the government should encourage other independent players to offer their common shares of up to 45 percent to comply with a constitutional mandate of encouraging private enterprises to broaden their base of ownership.

On the issue of the continuing increase in pump prices despite the Oil Deregulation Law, he emphasized that the policy objectives of the said law is to establish a regime of fair price which covers cost recovery and a reasonable return for the oil players.

He also noted that the participating oil companies which entered the market as a result of oil deregulation are not getting a fair rate of return compared to what the major players enjoyed during the regulated era due to various factors like government intervention, pressures from organized stakeholders in transport and other external pressures.

Martinez emphasized that regime of fair price has long been attained from the consumers’ point of view.

"This claim is further evidenced by the comparative prices of petroleum products in other countries where the Philippines registered one of the lowest pump prices among non-oil producing countries except Thailand, which heavily subsidize the commodity," he said.

He reiterated that if not for the Oil Deregulation Law which attracted the construction of more than 700 new stations nationwide and more than 100 new entrants which invested, as per Department of Energy figure, more than P16 billion, the price of petroleum products could have been higher since the formula used during the regulated regime recognizes a return on rate base of up to 12 percent per annum.