Government expects P21B from sale of Petron stake

The government expects to generate P21 billion in net proceeds from the sale of its 40- percent stake in Petron Corp., the country’s largest oil refiner, Finance Undersecretary Jeremias Paul Jr. said yesterday.

The amount is P4.7 billion lower than the actual P25.7 billion sale price agreed upon between the government and the Ashmore Group, the London-listed fund manager.

Of the P25.7 billion, P4.4 billion would go to Philippine National Oil Co. (PNOC) while the rest of the amount would be used to pay other expenses related to the sale such as financial advisory costs, Paul added. The advisors of the sale include the Development Bank of the Philippines and Citibank.

The move to acquire the government’s 40 percent stake in Petron would give Ashmore a controlling stake in Petron as it would increase its ownership in the company to roughly 90 percent. The Ashmore Group, which is represented in the country by former Trade Minister Roberto “Bobby” Ongpin, already owns 51 percent of the company after it acquired the 40-percent stake of Saudi Arabia-based Aramco Overseas Co. in Petron for $550 million and made a tender offer to other shareholders early this year.

The San Miguel Corp. had entered into an agreement with the Ashmore Group to buy 50.1 percent of the PNOC block.

With the transaction, Finance Secretary Margarito Teves said the government is on track to meeting its programmed deficit ceiling of P75 billion for 2008.

The government gave the Ashmore Group until Dec. 5 to exercise its right of first refusal on the PNOC block in Petron.

The government has decided to sell its stake in Petron, considered a crown jewel in the oil industry, to raise revenues for social services and infrastructure projects.