Petron mulls BOT deal for relocation of Pandacan facility

Petron Corp. is studying the possibility of entering into a build-operate-transfer (BOT) deal for the relocation of its storage facilities in Pandacan, a top company official said.

Petron chairman Nicasio Alcantara told reporters that such a scheme will allow the company to transfer its Pandacan oil warehouse “at zero investment”.

“We just have to pay a (throughput) fee,” the official said.

Alcantara said there are various companies that are engaged in the business of relocating oil facilities.

“There are companies offering such kind of services some are based in Singapore, Malaysia, and India,” he said.

The Petron chairman said there is a trend in other countries on the use of the BOT scheme for the transfer of facilities.

“It’s an industry trend. There is Vopak of North America,” he said.

Vopak is in the logistical services business (liquid chemical storage, waste management, fleet management, railcar cleaning) which provides efficient handling of products in a cost-effective manner.

But, Alcantara noted that Petron has not yet discussed this idea with other Pandacan locators — Pilipinas Shell Petroleum Corp. and Chevron Philippines Inc.

According to Alcantara, it would be cost-efficient for the three oil firms to enter into a BOT deal.

“In the business of hauling, the more volume, the less cost. But we haven’t decided yet if the relocation plan that we will submit to Supreme Court will be on a joint or individual basis,” he said. The high tribunal has ordered the three oil majors to come up with a comprehensive relocation plan by June 2008 after it ruled in favor of an ordinance which reclassified Pandacan from industrial to commercial zone.

On the relocation area, he said they have yet to determine the new site of the oil storage facility. “It may be in the south or in the north, or we can have one in the north and another in the south,” he said.

There is no more available space in Manila that could be classified as industrial zone.

Initial estimates indicate that oil firms will have to spend P10 billion to P15 billion if they are to relocate their oil facilities in Pandacan.

Shell has reportedly deferred its planned refinery upgrade pending the resolution of the Pandacan case.

Some foreign business groups have criticized the SC ruling saying that the re-zoning case of Pandacan may lead to “disastrous implications”.

The Pandacan oil depot supplies around half of the country’s total fuel demand and 100 percent of lubricant requirements, not only those of the transport sector, but also of the industrial sector.

Industry data shows that more than 1,800 retail stations in Regions 1 to 4, around 500 of which are in Metro Manila, get their fuel supply from the facility.

The depot likewise serves 70 percent of the shipping industry’s fuel needs and 75 percent of aviation fuel requirements.

Petron, Shell and Chevron said they would explore their legal options, particularly the possibility of appealing the high tribunal’s decision. The high tribunal on Feb. 13 this year upheld its earlier decision ordering the oil companies to move out of the depot, citing the danger posed by the facility to the public.