DOE says it can’t stop Petron from acquiring rival Liquigaz

MANILA, Philippines - The Department of Energy (DOE) said its hands are tied and that it cannot do anything on the plan of Petron Corp. to acquire rival Liquigaz Philippines Corp., a ranking official told The STAR.

Zenaida Monsada, director of the energy department’s Oil Industry Management Bureau said the agency has no jurisdiction over mergers and acquisitions even if the companies involved are oil firms.

“The DOE cannot do anything about mergers and acquisitions. We only have jurisdiction on the initial public offering (IPO) requirement of refiners,” she said, referring to the Oil Industry Deregulation Law of 1998, which requires oil refiners to offer shares to the public.

She said it was up to the Securities and Exchange Commission (SEC) to police corporations such as Petron regarding their acquisition activities if it deems necessary.

Furthermore, she said Congress can also pass a measure that would put safeguards against monopolies.

Petron is in the process of acquiring Liquigaz, a wholly-owned Philippine subsidiary of SHV Energy of the Netherlands.

Rep. Arnel Ty of the LPG Marketers’ Association has raised concerns that once Petron completes negotiations for the acquisition of Liquigaz, it may control the LPG industry with a 75-percent share.

Ty said Petron has given SHV a non-binding offer of $60 million for Liquigaz’s LPG business, a statement that Petron neither confirmed nor denied.

“The company confirms that it is participating in the proposed acquisition of the operations of Liquigaz, a wholly-owned subsidiary of SHV Energy of the Netherlands in the Philippines. The appropriate disclosure will be made by the company in the event a definitive agreement is concluded by it in respect of such proposed acquisition,” Petron said in an Aug. 15 disclosure to the Philippine Stock Exchange (PSE). 

Ty warned that Petron may end up dictating prices.

“Our sense is, we should not allow any single entity, or even two entities for that matter, to have such a strong command over the supply of a highly sensitive basic commodity such as LPG,” said Ty.

“Those who dominate the supply of a commodity also tend to have tremendous pricing power over that product,” he added.

Ty said Liquigaz has an import terminal in Mariveles, Bataan, where the company has one of the world’s largest mounded LPG storage facility of its kind, with a capacity to hold 12,000 metric tons.

This is enough to fill up more than one million 11-kilogram cylinders, he said.

In 2007, Petron acquired the cooking gas business of Chevron Philippines Inc. (formerly Caltex Philippines Inc.).