Noy squanders chance to influence fuel pricing

The government seems to have missed a golden opportunity to reclaim its ability to influence local prices of oil products after President Aquino turned down yesterday an offer from Petron Corp., now majority owned by conglomerate San Miguel Corp., to sell back to the state the refinery operations of the oil firm.

Aquino said the government does not have the expertise and “business acumen” to run the refinery despite the fact that the Petron refinery became the biggest in the country while in public hands during the term of former President Ferdinand Marcos.

Aquino said it would not be in the country’s best interest to buy back Petron’s Bataan refinery despite observations that this would give the government the needed leverage to influence the pricing of fuel products.

In thumbing down Petron’s offer to sell back to the government its Bataan refinery, Aquino admitted that his administration lacks the expertise and the business acumen to run Petron’s refinery operations.

“Government isn’t efficient in running something that has purely business applications,” the President told reporters Tuesday after his speech at the 110th founding anniversary of the Philippine Coast Guard in Port Area, Manila.

“I think that’s a good offer from them (SMC) but I don’t think at this point it would be in the best interest of the people if government were to re-run Petron, at least as far as the refinery operations are concerned,” he added.

Aquino’s admission of inefficiency came as oil companies announced a new round of oil price hikes, with an average of P1.40 per liter for unleaded gasoline, regular gas by P1 per liter, diesel by P0.55 per liter and kerosene by P0.50 per liter.

Energy Undersecretary Jay Layug defended the oil price hike, saying the price increase follows the decision of the Organization of Petroleum Exporting Countries or Opec to cut oil production due to a weaker-than-expected demand.

Earlier, Petron had offered to sell back to the government its Limay refinery in Bataan as it seeks ways to counter the adverse effects of oil price volatility on consumers.

Petron chairman and chief executive officer Ramon Ang said it is high time for the government to “reinvest” in Petron, a position that he stressed in a letter addressed to Energy Secretary Jose Rene Almendras, a copy of which which was submitted to the Philippine Stock Exchange.

“Public opinion urging the government to reinvest in Petron as a means to attain effective participation in the industry has reached us. The company is open to this idea. In particular, we are ready to offer our refinery assets (the Petron Bataan Refinery Complex in Limay, Bataan) for possible reacquisition by government if this will assist in attaining the government’s objectives at this time,” he said in his letter.

Ang said the company is willing to commission a third party for the valuation of the Limay asset and noted that Petron is “ready to discuss the appointment of a mutually acceptable third party to establish a valuation basis and transaction structure.”

The Petron official said government would be in a better position to “influence” oil prices if it acquires Limay.

“Having control of the largest petroleum refining assets in the country will place the government in a better position to develop and devise comprehensive and long-term programs and solutions. Through this acquisition, the government will enjoy significant influence on the prices of petroleum products and in securing the supply of petroleum products in the country,” Ang said as he stressed that “the recent trend of rising prices of petroleum products has led to the ongoing discussions in Congress and in media to revisit the Downstream Oil Industry Deregulation Law (Republic Act A8479) and a loud clamor for more government participation in the industry.”

In the same letter, Ang said reverting to a regulated oil industry will not solve the issue of continuing increase in oil prices. –Virgilio J. Bugaoisan, Daily Tribune