PNOC-EC has strategic value

Finance Secretary Margarito Teves wants to sell 40 percent of PNOC Exploration Corp. government still owns within the year to raise up to P11 billion. Gary Teves may have been awarded Finance Minister of the Year in Davos but it seems to me he is still basically a bean counter who is apparently not inclined to strategic thinking. It is a pity that this administration failed to realize it made a serious mistake in selling off the 40 percent government used to own in Petron, a strategic blunder. Now, it wants to do this.

PNOC-EC has a 10-percent interest in the Malampaya gas field off Palawan province. Keeping government’s interest in PNOC-EC allows it an investor’s view of technical and economic details it will never get its hands on as a regulator. Such information is vital, given the importance of Malampaya in our power generation for Luzon for a still significant number of years. Without this access, the foreigners in the consortium could be hiding technical data of national significance from us and we wouldn’t know it.

And it isn’t as if PNOC-EC is a drag on government finances. Its share of Malampaya production should more than compensate for the costs of maintaining a lean staff of technical experts. It gives government a corporate vehicle for expanded oil and gas exploration that will always come in handy when private sector is incapable or not willing to take the risk. We founded PNOC-EC to precisely jump start oil exploration in the country during the energy crisis years of the late 70s. Besides, its technical staff should be the source of capable regulators for the private sector oil explorers and developers.

Then again, Secretary Teves is only focused on his responsibility to maintain an elusive fiscal balance. He cannot be bothered by other areas of government responsibility, in this case for energy stability, a strategic goal an administration can only forget at its and the nation’s peril. The last time an administration pushed energy to the back burner was shortly after EDSA 1 and it resulted in a serious power shortage that was so economically debilitating it tarnished the other worthy achievements of the Cory administration.

I know Gary Teves is a decent and competent technocrat. But he is probably so punch drunk in his years of service to this administration he just wants to get his work done and not have to worry about energy or other things beyond his nose. Unfortunately, a cabinet member must share the President’s need to see the big picture and think strategically. I imagine if Ayala or Henry Sy makes a good offer to buy Malacañang Palace for conversion to a commercial center, Gary would consider it. A sense of history is the problem of the Historical Commission, not the Secretary of Finance who is desperate for funds.

It is interesting to note that Sen. Manny Villar feels the same way I do on the matter. In a recent column at Business Mirror, Manny observed “it looks like PNOC has changed its mandate from providing energy security to the country to ‘breeding’ corporations that will be sold at the right time to generate revenues for the government. Is PNOC joining the Bureau of Internal Revenue and the Bureau of Customs as revenue agencies? I hope that PNOC does not set aside its original mandate.”

Indeed the government has clearly lost its way in the matter of energy development and security. Again, Manny in that same column pointed out “the P58.5 billion paid by the Red Vulcan consortium for PNOC-EDC was a big help in narrowing the fiscal deficit. So was the P25.7 billion paid by the Ashmore group for the government’s remaining 40-percent stake in Petron Corp. With the sales, the government relinquished its hold on two strategic energy businesses: geothermal power and oil refining and distribution.”

Don’t get me wrong. Having been on the government side of energy, I know the limitations as well as the strategic value of a presence in an industry that should be largely private sector. The key is determining the optimum level of presence because it is also clear that the industry must be regulated intelligently and that can only be done when the regulator has the ability to think and act like the private sector… beat the private traders in their own game if need be.

I bumped into Energy Secretary Angelo Reyes the other week during the PRSP Anvil Awards night and he told me he read my column on the LPG situation. He said he agrees with most of the points I raised but suggested I was a bit too harsh on him. He said I have to understand that he does not have the resources and the organization to manage the energy sector as well as we did during the time of Energy Secretary Ronnie Velasco.

I told him it was partly his fault because he agreed to emasculate himself by having Petron fully privatized. He said it was the administration party line because they need to raise funds. But yes, he agreed with me that having Petron to keep the rest of the LPG industry honest could be a strategic advantage we had and he no longer has. And the trained professionals with years of experience in Petron and who understand the oil and LPG markets can do a immensely better job of regulating than ordinary bureaucrats in today’s Energy department with no experience in the industry.

Yes, I told Secretary Reyes, I totally understand his situation and I commiserate with him. But he should stand up and explain himself to his boss and not allow the bean counters in the cabinet prevail over his department’s strategic goals. Sure, Secretary Reyes became the unfortunate scapegoat and doormat with the LPG crisis and he should brace for even more serious consequences of this administration’s lack of strategic foresight on energy.

The disposal of Petron and PNOC-EDC left PNOC with PNOC-EC, which is into exploration, and PNOC-AFC, which is at the forefront of developing nonfossil-energy sources. It’s regrettable that the government is also planning to privatize PNOC-EC and lose one more strategic advantage we have in energy development.

And so, Sen. Villar writes, let’s go back to the original question: “Will PNOC set aside its original mandate of establishing energy security and become a revenue agency?” That’s what we get when Ate Glue named a former banker on top of PNOC rather than an energy professional.

Paging HSBC

I got this e-mail from Rommel Fajardo of Cainta, Rizal.

First of all I would like you to know that I am an avid reader of your columns. I find them very informative and objective. And the jokes are really funny.

I sent you this email to complain about HSBC’s strange practice of sending billing statements after the payment due dates have passed. Since December 2009, none of my billing statements arrived before the payment due dates. I called up HSBC Philippines to file a complaint and I was promised that they will conduct an investigation, and that I will not incur any finance or interest charges since it was not my fault that the billing statements were not delivered on time.

However, when I received my billing statement for the period covering Dec. 17, 2008 - Jan. 19, 2009, the Finance and Late Charges were clearly indicated. And to make matters worse, the most recent billing statement was again delivered late. I received the recent billing statement on Feb. 10, and the due date for payment, as reflected on the billing statement, was Feb. 9, which means that HSBC will again add Finance and Late charges to my next billing statement. That is just not right. I called up HSBC Philippines again, and I was fed with the same line – that they will conduct an investigation.

Is HSBC Philippines trying to earn more through dubious fees and charges? I know this may sound strange, considering that HSBC is a world-renowned brand, but stranger things have happened here in our country.

I’m looking forward to reading more of your columns.

Mr. Lucky

Here’s something from Dr. Ernie, an ER doctor in Dallas .

“How did this accident happen?” asked the ER doctor.

“Well,” explained the patient, “I was making love to my girlfriend on the living-room rug when, all of a sudden, the chandelier came crashing down on us.”

“Fortunately, you’ve only sustained some minor lacerations on your buttocks,” the doctor said. “You’re a very lucky man.”

“You said it, doc,” exclaimed the man. “A minute sooner and it could have fractured my skull!”

Boo Chanco’s e-mail address is [email protected]