The report about the government’s predisposition to unload its strategic 40-percent share in Petron Corp. is giving credence to the renewed buzz that the Alcantara family is out to seek control of the oil firm. For the Alcantaras, the prospect of adding Petron to their growing conglomerate is a strategic fit in this challenging regime of business environment made difficult by the subprime mess that has engulfed notable names in the world of finance, such as Bear Stearns.

This foray into the energy industry by the Alcantara group makes sense since most conglomerates are now making a beeline for this business field due to the prevailing view that the Petron stock is a defensive stock because it is considered a utility stock. The name of the game now is diversification, and the Alcantara family’s plan to buy into Petron affords it a window of opportunity and a toehold in the oil industry.

It must be noted that Saudi Aramco and the Alcantaras were earlier in talks regarding the desire of the foreign firm to let go of its 40-percent share in Petron. Unfortunately the talks fizzled out, although the emergence later on of a fund manager, Ashmore Holdings, as a prospective buyer of Saudi Aramco’s equity position gave rise to renewed speculation that the entry of Ashmore into the Petron equation, thanks to the supposed rmediation efforts of former trade chief Roberto Ongpin, may just be a “holding strategy” for the moment.

Thus, the pronouncement early this week that the government is also set to sell its own 40-percent holdings allows the Alcantaras a chance of getting a controlling stake in the company, which is a strategic move aimed not just at diversifying its interests but at riding a new business wave that is energy. The race to gain a toehold in the energy industry has become an intense battleground in business. In fact, even beer-and-food giant San Miguel Corp. is willing to forgo its supposed core business to be in the so-called sunshine industries like energy.

Why, even the oil-exploration industry is suddenly buzzing with considerable interest from notable names in the Philippine business scene. The surge in the price of oil to above $100 per barrel has given rise to intense lobbying for prized oil-and-gas acreage in offshore Palawan and other prospects. Even Energy Secretary Angelo Reyes is said to have noticed an avalanche of interest from business groups wanting to prospect for oil in the country. And all because the surge in the price of oil has made the risk in oil prospecting a worthy gamble.

An oil-well drilling means investing $8 million, not to mention the seismic survey and the 3D sounding of the humps that may contain oil or gas. A discovery of  trapped oil that could contain, say, 30 million barrels, would fetch $3 billion, as against the projected expenditures of $750 million, tops, for the establishment of an oil platform and the oil-flowing exercise, as well as getting an oil tanker to store the find until it is sold in the market.

Rice coupons

The government’s plan to issue rice coupons for the poor as a temporary relief from the rice crisis has gotten the nod of Sen. Loren Legarda, who supported the proposal to “cushion the impact of the high prices of rice on the poor as a humanitarian act.” The senator pointed out, though, that the rice crisis resulted from wrong government economic policies and neglect of the farm sector. “ The poor should not be punished for the mistakes of their government. We should not let them starve,” she said.

Under the proposal, the Department of Social Welfare and Development would distribute rice coupons to those categorized as “poor.” This would entitle them to buy rice from the National Food Authority (NFA) at subsidized prices. The measure would do away with the possible black marketing of the staple as there is a wide disparity between NFA rice and commercial rice. But what is needed, as correctly pointed out by the senator, is that the government should give more support to the farmers through irrigation services, fertilizer and hybrid-seed subsidies, farm-to-market roads and technical assistance.

According to Legarda, the current crisis is not only rice shortage, but more the steep increase in the price of the commodity that the poor can no longer afford. “This is why the poor are queuing up for hours just to be able to buy NFA rice at subsidized prices, even though non-NFA or commercial rice is available elsewhere. The issue is the price of rice which the poor cannot afford.”

She said imported rice is available from foreign sources provided the “right price” is paid. But because of the 50-percent tariff on imported rice, it is “utterly out of the reach of the poor, or even of the middle-income groups.” Loren said that since the rice crisis consists mainly of an acute shortage of locally produced rice and a steep increase in the prices of the rice bought from abroad, the government should consider suspending the 50-percent tax on imported rice to “provide the Filipino consumers with economic relief, even if only temporarily.”

Legarda said that even the middle class may no longer be able to afford imported rice because its price has been bloated by another 50 percent. “We must remember that the 50-percent tariff on rice imports is based on normal local rice production. But when our people are faced with a general rice crisis of unprecedented high rice prices, then it’s a new situation altogether. We must give a relief to the consumer by temporarily lifting the tariffs until the situation has normalized,” Legarda declared that government policymakers should take a lesson from the current rice crisis by reviewing the current agricultural policies which encourage export orientation and import dependence on staples while promoting production of cash crops.

“I think we should give priority to food security for all our people,” said Legarda, who is chair of the Senate Committee on Economic Affairs. “Once our food security is established, we can produce other crops for export. But you cannot do anything without a full stomach. Besides, food security would save us expenses in foreign exchange which we can use for developmental purposes.” 

E-mail: hugagni@yahoo.com

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