ATTUNED to its thrust of bidding out its interests in several utilities and companies, the government is currently contemplating whether it will sell out Philippine National Oil Co.’s (PNOC) 40-percent interest in local refiner Petron Corp.

Finance Secretary Margarito B. Teves said the government will be finalizing its decision whether to sell PNOC’s 40-percent equity in Petron or not within the second half of the year.

Energy Secretary Angelo T. Reyes agreed, saying if there would be good offers, the government could discuss that.

Reyes, however, admitted that no investors have yet offered to buy the government’s interest in Petron.

“We haven’t discussed that yet. But if there would be an offer, we might consider that as one option [for the government to raise more revenues this year],” Reyes said.

On May 12, PNOC and its financial advisors ING Bank and the Development Bank of the Philippines (DBP) will decide if it would consider to buy the 40-percent stake of Aramco Overseas Co. in Petron.

Aramco earlier announced it entered into an agreement with UK-based fund manager Ashmore Group for the sale of its 40-percent stake in Petron at $550 million.

Aramco earlier indicated interest to sell its 40-percent stake in Petron at $550 million to its prospective buyer, Ashmore Group’s SEA Refinery Holdings.

PNOC had announced it tapped the services of ING Group to evaluate the offer of the Ashmore Group to acquire Aramco Overseas Co.’s 40-percent shares in Petron.

“We have tapped ING to help us in evaluating the Aramco shares that Ashmore intends to buy,” Antonio M. Cailao, PNOC president, told reporters.

The Department of Energy (DOE) earlier said it will still have to look into the said offer, and that it will engage the services of an independent financial adviser—somebody who will make an independent valuation and advice the government.

Reyes said they would have to make a decision on whether they will exercise the right to buy it, approve the sale, or to just assign it to another third party.

“Determining the share price takes a lot of study, and that’s why we will meet and find out how we will arrive at a reasonable estimate of the appropriate share price for the Petron shares,” Reyes said.

Reyes even noted the PNOC has been given 60 days within which to make a determination of whether it wants to exercise preemptive rights or exercise its option to match the offer, or to assign to another buyer.

Reyes, who also chairs PNOC, said Ashmore, which is a global asset-management company listed in the London Stock Exchange, has assets under management amounting to $36.5 billion and has a strong track record of constructive partnerships worldwide, including significant Philippines-related investments over a period of many years.

Reyes said the study that would be undertaken will essentially look into the valuation of shares, especially the price the government will have to accept.

Reyes revealed they would also hire the services of a third-party financial adviser.

Hinting the government could actually look into renationalizing Petron, Reyes said it is a decision the government would have to evaluate further whether it should invest or whether they will go in and buy.

Reyes said an investment decision has to be made first followed by a financial decision.

“And do we have the money?” he asked, but said it is PNOC that will buy back Petron. “And we would first need to look at the cash flow from the proceeds of Malampaya as sources for funding for this—if we decide to exercise that option,” said Reyes.

A source, on the other hand, expressed disagreement with the government’s hint that it will also look at buying back Petron.

The source, who requested anonymity, said privatization and deregulation are part of the broad policy of economic liberalization that the government has been pursuing for the last 20 years, with the aim of spurring investments and accelerating the country’s economic growth.

In the downstream oil industry, according to the source, the twin policies of privatization and deregulation are also meant to achieve market-related pricing of petroleum products, which also promotes efficient consumption of a scarce resource and also frees the government from the burden of administering oil prices, which are often subject to political pressures.

The source said the earlier regulation of the downstream oil industry resulted in enormous subsidy costs for the government and had to be discontinued.  

“With deregulation, Petron had to be privatized—it was pointless to deregulate if the government would continue to determine local oil prices through a state-owned company,” the source said.

ATTUNED to its thrust of bidding out its interests in several utilities and companies, the government is currently contemplating whether it will sell out Philippine National Oil Co.’s (PNOC) 40-percent interest in local refiner Petron Corp.

THE ailing garments industry, now facing tougher times with the economic slowdown in the US, its main market, has asked the government to put up a unit similar to the defunct Garments and Textile Export Board (GTEB) that will help in the marketing efforts abroad and in the gathering of industry data globally.

ALFONSO, Cavite—Government-run Power Sector Assets and Liabilities Management Corp. (Psalm) is looking at prepaying some $300 million worth of yen-denominated loans of the National Power Corp. (Napocor) within the year.

SPEAKER Prospero Nograles has expressed support for a new wage increase even as he urged the regional tripartite wage boards to meet immediately to come up with regional rates calibrated to enable both the employees and the employers to cope with the existing economic situation.

Amid problems hounding the agriculture sector due to soaring rice prices, the National Irrigation Authority (NIA) continues to post cost increases for two more ongoing foreign-assisted projects, according to documents from the National Economic and Development Authority (Neda).

OIL companies have again adjusted the price of diesel, gasoline and kerosene by 50 centavos a liter to further reflect the continuous surge of world oil prices.