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THE
government’s failure thus far to exercise its right of
first refusal in order to reacquire the 40-percent
Petron stake that Saudi-Aramco is selling to the
London-based Ashmore Ltd. investment firm has sparked
alarm among senators. Among the first to complain about
the insufficient information on the impending sale of a
huge block of Petron shares to a third party in a deal
set to be concluded by next week was Sen. Mar Roxas II,
chairman of the trade and commerce committee.
Sen.
Juan Ponce Enrile, interpellating Roxas at Monday’s
session, likened the Ashmore group to a hedge-fund
company of “vulture capitalists” out to buy Aramco’s
Petron shares to reap more profits by turning around and
later unloading all their Petron shares in the market.
“We understand that these types of investors do not stay
in a captured company for five years.”
In a
privileged speech, Roxas raised the alarm over the
unexplained consequences of the sale of Petron shares
when the price of oil has breached the $100 a barrel.
“At a time when there is great uncertainty relative to
the supply and price of oil, would it not be prudent for
the government to have exercised its right of first
refusal, so it could resell to ‘strategic hands,’ such
as Brunei, the UAE, Indonesia, Malaysia and other oil
producers?”
“Normally, this [Aramco-Ashmore deal] would be an
intercorporate financial transaction, one buyer
purchasing the ownership interest of an existing
investor. But this is not an ordinary time, nor is this
an ordinary transaction,” he added.
Roxas
invoked the “right of first refusal,” which means that
the Philippine government—through the Philippine
National Oil Co.—has the right to purchase Saudi
Aramco’s stake in Petron before a third party can
purchase it. Petron supplies 40 percent of the
domestic-oil market and produces 180,000 barrels of the
daily demand of 330,000 barrels.
Roxas
recalled that in 1994, when the government chose to
privatize 40 percent of Petron shares, it chose Saudi
Arabia through its Aramco subsidiary, Aramco Overseas
Co., because it was considered a strategic partner that
would ensure the steady supply of oil to the country.
“The
reason for selling 40 percent of Petron to Saudi Arabia
via Aramco in 1994 was that it would be able to ensure a
steady supply of crude, and so therefore if they held an
ownership interest in Petron, they would make sure that
in fact Petron would be well-supplied with oil,” he
said.
In
contrast, Roxas said, Ashmore Ltd. is a “hedge fund,”
and its operations are in the buying and selling of
shares of stock in various businesses, not in petroleum
operations. “If we treat this sale of shares by Saudi
Aramco to Ashmore as a purely financial transaction,
then the rationale for having sold this to begin with in
1994 is now rendered not only obsolete but also
ineffective,” he said. The transaction amounts to $550
million, nearly the same paid for by Saudi Aramco.
“The
government saw that they wanted in fact to have this
right of first refusal to ensure that the 40-percent
ownership interest would always be in ‘friendly hands.’
I’m not so sure that a nameless, faceless hedge fund
based in London can be considered friendly, especially
in these times of high oil prices and scarcity of
supply,” he added.
Roxas
insisted that the government can still exercise right of
first refusal before Aramco and Ashmore could conclude
the deal by next week. “These are not ordinary times.
Why are we not exercising the right to buy back Petron
shares?” he asked in demanding an explanation from the
government.
Raising
similar concerns, Sen. Joker Arroyo confirmed that the
Ramos administration “blundered in 1994 when we sold
Petron to Aramco.”
“Whatever we do now [about the Petron shares] must be
focused on how we reduce the price of oil. It must
result in benefits to the people,” Arroyo added.
Sen.
Francis Escudero admitted that he, too, could not
understand “why the government is not giving the people
the information on such a vital state asset [like Petron].
It must tell the people about the options here.”
Escudero
and Roxas agreed on a need for Congress to review the
oil deregulation law. “The review will show if we are
being taken for a ride. It would also allow us to make
sure that we are not being exploited.”
“My
advocacy is to buy back the Petron shares of Aramco and
put it in friendly hands, not hang on to it. After all,
this is a major strategic asset and should not be
treated as a purely commercial transaction. We need to
preserve national interest to have continued supply at
reasonable rates,” Roxas added. |
