PNOC-EC optimistic of higher income this year

MANILA, Philippines - Amid uncertainties on its privatization tack, publicly-listed PNOC-Exploration Corp. (EC) said it is confident it would register a higher income level this year.

“According to our finance group, our projected income this year is P2 billion, a little improvement from our 2009 financial performance,” PNOC president and CEO Rafael del Pilar said on the sidelines of the firm’s stockholders’ meeting yesterday.

In 2009, the company registered a net income of P1.8 billion.  For the past years, PNOC-EC has been delivering revenues for the government through its 10-percent interest in the $4.5-billion Malampaya deep water gas to power project in Northwest Palawan.

During the meeting, the company elected a new set of directors, namely: Minita Chico-Nazario, Rafael E. del Pilar, Tirso R. Danga, William D. Dichoso, Armando P. Galimba, Jose P. Leviste Jr., Christopher H. Lindo and Guillermo N. Hernandez.

It was not immediately clear why there was a board revamp PNOC-EC since there would be a change in administration in the next few weeks. The new management said the incoming Aquino administration has the option to appoint new board members on June 30.

“So this board will serve only up to the time the next administration will elect its own board. It’s really up to the next administration to elect its new board to determine if they will proceed with the privatization,” Del Pilar said.

There were talks the new board was installed to allegedly oversee the privatization of 60 percent of PNOC-EC shares in Malampaya in the remaining days of the Arroyo administration.

However, Del Pilar denied this, saying he himself does not see the need to privatize the stake of PNOC-EC.

“That’s my position, but I still have to talk to the new board. The new board has not met yet. That’s something I will propose. I think, this is just my opinion, there clearly is no more time between now and the next administration coming in to do a bidding, which is necessary for the sale,” he said.

“As far as I’m concerned there will be no privatization taking place during this period (transition) or until the new board to be nominated by the new administration has been elected,” the official said.

The displaced PNOC-EC board headed by Crismel Verano earlier said they were being replaced primarily to push for the sale of the Malampaya assets even if the new board has only around 20 days in office before the new administration steps in.

But Del Pilar said: “We have obligations which entail expenses. To sustain exploration for oil, gas and coal you need a source of revenue in order to develop and grow those businesses. Our contribution to the treasury is significant.”

He said if they would need to privatize, they may do it through the additional issuance of shares and offer it to the public.

“That’s the essence of privatization. It is difficult to privatize where you sell an asset and then you leave a shell company that is a burden to the country. When you sell an asset that’s earning, what you’ll be left with are expenses. Might as well close that company,” he said.

As this developed, Del Pilar said talks with San Miguel Corp. (SMC) and PNOC-EC to develop the P5 billion mine-mouth power plant in Isabela are still ongoing.

“As what we have reported before, San Miguel continues to be interested in our project but we haven’t signed any definitive agreement with them. One, where they are particularly interested is our coal mine-mouth project in Isabela. As you know, we have slow progress there because of there is some opposition by the local community. They have reservations about coal mines, so we had to inform and educate them on the advances in coal mining,” Del Pilar said.

He said they are still threshing out some issues on the project.

“The biggest difficulty there is the ECC (environmental compliance certificate) and the community acceptance, which we just recently were able to get the support. The next step to that is the front-end engineering design – that’s where we are at the moment,” he said.

He said based on initial talks, SMC is still interested to become its joint venture partner in the project.