Palace rejects buyback of Petron

Malacañang rejected yesterday a proposal to regain state control of oil refiner Petron Corp. through a government buyback of shares sold to Saudi Arabian-American Oil Co. (Aramco) eight years ago.

Following the Cabinet’s first regional Cabinet meeting held at the Petron Refinery auditorium in Limay Bataan, Presidential Spokesman Rigoberto Tiglao said the Arroyo administration will not support the proposal being revived by militant groups.

"The administration cannot reverse a major privatization program of the national government," Tiglao said.

He said re-acquisition of shares to gain back state control of the oil firm would only send wrong signals and scare away foreign investors.

Militant and left-leaning groups have been calling on the government to buy back shares in Petron in light of the recent adjustments in pump prices.

The country’s "Big 3" oil companies — Petron, Pilipinas Shell Petroleum Corp. and Caltex Phils. Inc. — have recently increased the prices of petroleum products by an average 50 centavos per liter due to soaring crude prices in the world market. The upsurge has been brought about by the growing conflict in the Middle East, the world’s top oil producing and exporting region.

Tiglao assured the public yesterday that the surge will only be temporary.

"We are hopeful that the oil situation will stabilize soon as things settle down," he said.

Tiglao stressed that even if the government is able to get back shares in Petron, price control still cannot be achieved since the Oil Deregulation Law has stripped the government of its powers to fix pump prices.

It was during the Ramos administration that government decided to sell 40 percent shares to Aramco. The rest were sold to smaller investors in the stock market.

Militant groups had argued that government’s reacquisition of Petron was the only way to break up the alleged "price manipulation" by the industry players.

The groups have threatened to march to Malacañang tomorrow to reiterate their demands.

In the run-up to the rally at Mendiola, the Bagong Alyansang

Makabayan (Bayan) picketed the Shell headquarters in Makati City yesterday, denouncing the latest hike in gasoline and diesel prices.

"Shell, Caltex and Petron are obviously deceiving the public every time there is a movement in world prices," Bayan secretary general Teodoro Casiño said.

In a press statement, Casiño accused the Big 3 of making excuses not to lower pump prices when world prices go down but immediately jacking them up when there is an increase in the world market.

"The 30 or 40-day inventory conveniently disappears each time the oil cartel implements an upward price adjustment," he said.

DOE asks oil firms to hike inventories

The Department of Energy (DOE) asked the country’s oil companies yesterday to increase their inventories so that they can cope with the continued increase in the price of crude in the world market.

"As of March 15, they had been maintaining a 54-day inventory. If oil prices continue to increase, there should be discussions on possible lengthening of this inventory," Energy Secretary Vincent Perez said.

As a rule of thumb, oil firms have to keep an inventory level of 60 days.

The oil firms have indicated another round of price increases within the month due to a P1.35 per liter underrecovery. They noted that world prices continue to go beyond the $25 per barrel levels.

Perez said the DOE is in the process of finalizing an oil contingency plan in the event of an oil supply shortage. Included in the plan is the use of alternative fuel for transportation, particularly coconut oil diesel.

"This is something that we are studying together with the Philippine Coconut Authority. Since the Philippines is the world’s largest producer of coconut oil, that would be an ideal product and a most appropriate alternative fuel," he said.

The DOE chief said they are also trying to convince oil companies to use coco diesel for blending with petroleum diesel as well as push for more gas and oil exploration in the country.