Gov't likely to bid out 40% Petron stake by Nov

The state-owned Philippine National Oil Co. (PNOC) will likely bid out its 40-percent interest in oil refiner Petron Corp. by November this year, a ranking company official said.

In a chance interview, PNOC president Antonio Cailao told reporters that they have commissioned the Development Bank of the Philippines (DBP) as financial advisor for the sale.

He said they have also asked DBP to tap an international partner to assist in handling the sale of the Petron shares. 

“We are looking at November as an ideal date for the sale,” the PNOC chief said.

Asked how much they intend to raise from the sale process, Cailao said: “We hope to get higher than $550 million.”

DBP and Anglo-Dutch financial giant ING Bank were earlier hired by PNOC to study the bid of London-based fund manager Ashmore Group, which bought the 40 percent stake of Saudi Overseas Co. (Saudi Aramco) in Petron for $550 million. 

The PNOC board earlier approved the sale of the remaining shares of the government in the country’s largest oil refiner.

With the surge in crude prices, Petron is deemed to be an attractive investmen as it is a leader in the industry, cornering more than 38 percent of the domestic market for oil.

Although some observers believe that keeping the government’s 40-percent stake in Petron will allow the Department of Energy (DOE) to maintain “check and balance” in the oil industry, others said Petron has been making much less profits under a deregulated environment because it has been used by the government as a leverage in controlling oil prices at the expense of its investors and competitors. 

Petron supplies nearly 40 percent of the country’s total fuel requirements. In 2007, it posted a net income of P6.4 billion, up 6.3 percent over its 2006 profits.

Industry sources, on the other hand, noted that whether the government is in Petron or not, it is still the market dictating the movements in oil prices. “At the end of the day, Petron will still have to compete with other players whether its government-owned or not. 

Petron  was previously owned 100 percent by the National Government until a 40 percent block was sold to Saudi Aramco in 1994. 

A 20 percent portion, on the other hand, was sold through an initial public offering (IPO). – Donnabelle L. Gatdula