MANILA, May 9, 2008 (STAR) By Iris Gonzales - The government would consider all offers for its stake in Petron Corp., the country’s largest oil refiner, Finance Secretary Margarito Teves said yesterday.

Teves made the announcement after Gokongwei-owned JG Summit Holdings Inc. indicated it was willing to buy the 40 percent stake held by state-owned Philippine National Oil Co. (PNOC) in Petron for P24.5 billion.

“We are keeping our options open on the government’s remaining stake in Petron. We will ensure, however, that any transaction, if ever undertaken, will be open and competitive,” Teves told reporters.

JG Summit conveyed its offer in a letter to Energy Secretary Angelo Reyes, PNOC ex-officio chairman.

“We are interested in making an offer to purchase the shares at P6.55 each. We are prepared to discuss this offer with you as well as the other terms and conditions to be agreed upon for the purchase,” said Lance Gokongwei, president and chief operating officer of JG Summit.

JG Summit has a petrochemical business carried out by its wholly owned subsidiary JG Summit Petrochemical Corp.

The government has been trying to privatize some of its assets as part of efforts to raise revenues.

The Finance department has set a target of P30 billion from privatization for 2008 or one third of the P90.6 billion generated last year.

Aside from the Fujimi property in Japan, the P30 billion includes expected revenues from the sale of the government’s stake in power distributor Manila Electric Co., and the 100-hectare Food Terminals Inc. (FTI) in Taguig.

Ensure transparency

Sen. Manuel Roxas II stressed that there should be transparency in the sale of Petron shares as the Gokongwei group and Morgan Stanley have expressed interest in buying the government stake and another 40 percent held by Saudi Aramco, respectively, in Petron Corp.

Aramco has also received an offer of $550 million from London-based investment fund Ashmore Group for the stake, but the PNOC, which also owns a 40 percent stake in the country’s largest refiner, has the right of first refusal.

Officials said PNOC can also assign its option to a third party. Its board meets today to decide on a course of action.

PNOC has to make a decision by May 12, based on the 1994 agreement with Aramco giving the state power firm 60 days to decide whether to exercise the right of first refusal or assign its option to a third party.

Roxas urged the government to consider offers for the purchase of its Petron shares while stressing that it has four days left before its right of first refusal on the 40 percent Saudi Aramco stake in Petron Corp. lapses.

“All these offers could have come in earlier had the executive branch been clearer and more transparent on where our strategic interests lie. Until now, we don’t really have an energy plan that would indicate how the Petron deal fits in with our oil supply requirements,” he said.

He said the government, represented by the Department of Energy (DOE) and the PNOC, must be mindful that its decision on the Petron stake comes at a time when there is great uncertainty on the supply and price of oil.

“It has four days left, and the government has to immediately tell the public what it plans to do with its option to buy back the 40 percent stake of Saudi Aramco in Petron so it can re-sell it to a company that has a stake in the country. Our people deserve to know what the government’s plan is and why,” he said.

Roxas, chairman of the Senate trade and commerce committee, said the government is not helpless in this planned sale of Saudi Aramco of its Petron stake to Ashmore Ltd.

In fact, he said that the right of first refusal was put in place so that the government could ensure that the 40 percent stake in Petron would always be “in friendly hands.”

“The point is, the government has yet to explain what it plans to do with this option. They may have very good reasons not to exercise this option, but to date we don’t know what these are. And if these ‘good reasons’ don’t exist, we ought to instead exercise this right so we can place this key asset in friendly hands,” he said.

“I advocate that the government exercise this right on the 40 percent Petron shares and sell it to another ‘strategic investor,’ but it does not mean that the government will have to put money out. As reported, officials have admitted that PNOC can assign its first refusal option to another interested party,” he added.

By “friendly hands,” Roxas was referring to companies that have access to crude oil – such as those from Brunei, the United Arab Emirates, Indonesia and other oil-producing countries – or who otherwise have petroleum operations. “Friendly hands” could also include Filipino firms, or those which have long-term interest in the Philippines, he said. – With Aurea Calica

Chief News Editor: Sol Jose Vanzi

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