|
A CALL
by several senators for the Arroyo administration to buy
back the 40-percent Petron shares that Saudi Aramco is
selling to the Ashmore Group, a London-based investment
firm, in order to regain the government’s leverage in
the local oil industry as prices of petroleum products
continue rising, deserves some attention for two
reasons: at the very least, the public-interest issues
require this because Filipinos are feeling the pinch;
and two, the winds of change elsewhere in the globe are
drifting toward greater state intervention, at least in
areas of national life where supervening conditions
warrant it, as in the current rice and commodity market
scrambles.
On
Thursday last week, Sen. Miriam Defensor Santiago, who
chairs the Senate energy committee, suggested at a
public hearing that if the administration could raise
$550 million (P22.5 billion), it would be better to buy
back the 40 percent of Petron rather than sell the
shares to another foreign company.
“With
oil prices shooting straight up off the computer screen
[note: it reached another record high of nearly $120 per
barrel on Monday], keeping Petron as a wholly owned
government corporation would assure stability and a
reasonable increase in the prices of oil in the local
market. It should serve national rather than commercial
interest,” she said.
Sen.
Juan Ponce Enrile had an even tougher idea: If the
Department of Finance could not raise the P23 billion to
buy back the Aramco shares, then the government should
just unload its entire stake in Petron and Congress
could enact a law to regulate the entire industry.
Earlier,
Finance Secretary Margarito Teves had acknowledged to
the senators that it would be “extremely difficult” to
raise the money given the tight budget situation.
“Theoretically, we can buy back [the Petron shares of
Aramco] but it would be extremely expensive for us.”
Still, Teves assured the senators he would study the
proposal—seriously, we hope.
In
pushing through with the sale of Petron shares to Saudi
Aramco, the Ramos administration, according to Enrile,
effectively made the government lose a vital leverage in
the foreign-dominated oil industry. “I don’t think Ramos
understood why we formed Petron,” Enrile said, recalling
that former President Ferdinand Marcos put up Petron by
acquiring Esso and Mobil “precisely because we wanted to
know what is going on in the oil industry for the
protection of the people. But those who sold it did not
know this background . . . as a result, the government
cannot understand the pricing system now.”
Enrile
could not resist the irony: The government sold its
shares in Petron to the Saudi company because it was
supposed to assure a steady source of oil supply. “But
if the new buyer that is going to acquire it is an
investment house, what if they dump the shares in the
market?”
We
understand some other senators, like Mar Roxas II, had
earlier raised a similar question. They should get their
act together and do something before May 12, or condemn
Filipinos once again to the vagaries of a ruthless
market and even more ruthless captains of finance.
Supplying nearly 40 percent of the country’s total fuel
requirements—with more than 1,250 service stations
nationwide—Petron is the largest service-station network
in the country. It is owned jointly by the Philippine
National Oil Co. (PNOC) under President Antonio Cailao
and by Aramco Overseas Co.
Aramco
has announced plans to sell its entire 40-percent stake
in Petron to a company owned by the Ashmore Group, which
has offered $550 million for the shares. Under the
shareholder’s agreement with Aramco, PNOC has 60 days
from the transfer notice, or until May 12, 2008, to
decide whether to exercise its right of first offer to
buy it back.
“Our
government should [have control of] our own oil-refining
company, so that we can protect Filipino consumers
against shocking spikes in the price of oil. But the big
question is whether the administration has $550 million
to regain ownership of Petron,”
Santiago
said last week. Yet, the bigger question if Petron
indeed goes to Ashmore was raised by the senator
herself: While Saudi Aramco remains part owner of Petron,
it must honor a 1994 Crude-Oil Supply Agreement which
ends in 2014. But if Aramco sells its equity in Petron,
Aramco has the right to preterminate the Crude-Oil
Supply Agreement by simply giving 90 days’ prior notice.
Santiago
proposes that in order to protect the Philippine
crude-oil supply, “PNOC should not waive its right to
first offer to buy until it has renegotiated the
Crude-Oil Supply Agreement. Aramco should surrender its
present right to preterminate the agreement,” she added,
while warning that “a sale to Ashmore might stifle
competition, and serve to protect Arabian national
companies.”
A few
years ago, such comments would have been quickly shot
down as the paranoia of nationalists and protectionists.
Yet, Philippine leaders, if they observe well what’s
happening in the rest of both the developed and
developing world, should see that recent events make it
a duty for states to come in when certain conditions are
present. As in, for example, or more especially, energy
policy, on which turns the whole
food-commodities-production nexus. A country with a very
weak flank as far as sourcing petroleum is concerned
will be hostage to skyrocketing world prices, and
everything else in its economy will suffer
correspondingly.
And yet,
as gleaned from a special report by the Wall Street
Journal on how a “new nationalism” is straining global
ties, many countries in recent years have moved a step
or several steps away from the speeding train of
globalization, if only to better serve their own
national interests. The “flat” world of multilateralism
and deregulation has been outweighed in certain critical
aspects by national barriers put up by some states
seeing the need to have better control of their own
resources, both for their own consumption and in order
to maximize profits from them, as Russia and Venezuela
have done: the former by threatening to cut off natural
gas supplies to Western Europe and the latter by
nationalizing its oil fields. This is not to say that
their bullying tactics against their neighbors are
morally right, only that by exercising such options,
they have shown one extreme of an increasingly wide
range with which states may choose to protect their
citizens as food and energy become increasingly harder
and costlier to source as the climate-change bomb ticks
for the planet. As the WSJ “News In Depth” report puts
it, the growing strength of governments is being
expressed in various ways, depending on the
circumstance: rich countries generally impose higher
taxes and more regulation; in the poorer countries, the
surge in food prices are leading to new export barriers,
as we have been seeing with rice.
Is the
world seeing a full turnaround from globalization to
extreme nationalism? Not necessarily. As the WSJ article
indicates, a recent poll by BBC World Service indicated
big pluralities in the responses of 21 out of 34
nations, with the consensus simply saying the pace of
globalization has been too fast—meaning, when their own
national interest requires, governments should apply the
brakes if only to spare their own people undue agony.
Now, is
this too much to expect from a government? The
Petron-Aramco-Ashmore case is an acid test, and people
are watching. |
