Government urged not to privatize PNOC-EC

MANILA, Philippines - The National Government is being urged not to privatize the state-owned oil and gas exploration firm PNOC- Exploration Corp. (EC).

PNOC-EC chairman Jacinto Paras said government should spare the company from the list of assets to be auctioned off, arguing that PNOC-EC has been a consistent revenue-earner for the government.

Though the PNOC-EC official acknowledges the Finance department’s concern to raise funds to plug the budget deficit, he said selling the exploration firm to the private sector may work to the detriment of the government.

“That’s the prerogative of the government to sell its assets. We at PNOC-EC board feel that it should preserve the corporation but that can be overruled by higher authority,” he said.

Paras said the DOF may still have other options such as selling the asset but not majority of the shares of the company.

Paras said that they still have to determine the privatization mode to be used for PNOC-EC.

Early this week, Finance Secretary Margarito Teves said they would push through with the sale of PNOC-EC but it may be done in the early part of next year.

But Paras expressed doubts if the government could still create a similar company such as PNOC-EC.

“We don’t know if we can, in the future, have the same kind of company. They should also look at the future,” he said.

PNOC-EC has been consistently remitting dividends to the government. Recently, it announced that it will remit dividends worth P500 million at the end of the month, the second time this year.

The company remitted P1 billion worth of dividends to the Finance Department in July this year.

PNOC-EC is supposed to be privatized this year as set by DOF but the board of PNOC-EC has cautioned the government against the sale of the government’s 40 percent stake.

“As far as PNOC-EC is concerned, its privatization at this time is untimely due to the depressed stock market prices. Any forced privatization may not be advantageous to the corporation and the government as it may lead to a “fire sale”. So, the PNOC EC board thinks it is best to wait for the economy to improve,” it said.

PNOC-EC holds a 10 percent stake in the $4.5-billion Malampaya gas-to-power project. It also holds a stake in various service contracts which are set to explore for oil and gas reserves.

In its early years, PNOC-EC served mainly as a catalyst in petroleum exploration, focusing its activities in frontier onshore areas in Cagayan Valley, Central Luzon and Samar .

In 1994, PNOC-EC’s three-Megawatt San Antonio gas power plant in Echague, Isabela was commissioned, providing electricity to more than 10,000 households. The operation of the plant made PNOC-EC the country’s first producer of indigenous natural gas.