PH says has no funds to buy Petron refinery


Posted at Oct 14 2011 10:41 AM | Updated as of Oct 15 2011 12:49 AM

MANILA - The Philippine government cannot buy Petron Corp's 180,000 barrels-per-day refinery, which the company proposed to sell to the government, without disrupting planned higher spending on basic social services, the Energy secretary said on Friday. 

San Miguel Corp said on Thursday it had offered Petron's refinery, the largest in the country, to the government. It had previously planned an upgrade of the facility worth around $1.8 billion.

"We have not said 'no'," Rene Almendras told reporters. "But we have other priorities right now." 

"I have talked to some people in the cabinet and clearly, what the Finance group said is that we don't have the money," he said. 

Manila would have to forego several school and hospital development projects to buy the refinery, Almendras said.  

Petron, state owned before its 1994 initial public offering, has proposed the appointment of a third party to establish the valuation and set the deal structure for the Bataan refinery on the main Luzon island. 

Petron is controlled by conglomerate San Miguel, which was previously looking to raise its ownership up to 90 percent. 

San Miguel president Ramon Ang, in an October 11 letter to Almendras, relayed Petron's support for the government's thrust to counter the adverse effects of rising fuel prices. 

But Ang, who is also president of Petron, said the oil firm opposed calls to scrap the 1998 Downstream Oil Industry Deregulation Law because deregulation has benefited the industry and economy.  

"Mr. Ang has made very, very clear his offer to sell Petron's refinery is not a threat to the government," Almendras said. 

"He is just airing his frustration over accusations that they are making huge profits from high oil prices. And he is saying that to reverse deregulation is not the way to go."      

Shares of Petron fell as much as 2.1 percent early on Friday before trimming its losses to around 1 percent in mid-session. San Miguel was almost flat in a market that rose 0.7 percent. 

Almendras also told reporters that state-run oil and gas producer PNOC Exploration Corp would remain publicly listed, and a plan to widen its public float would have to wait until market conditions improve.