Bayan hits Petron sale to a British firm

News Release
16 March 2008

The Bagong Alyansang Makabayan (Bayan) criticized the Arroyo government for again compromising public interest with the sale of Petron Corp. to a British firm. The group said that the government should acquire the 40% share of Saudi Aramco in Petron instead of allowing its purchase by Ashmore.

A report Thursday said that London-based investment firm Ashmore has inked a deal with Saudi Aramco for the acquisition of the latter’s share in Petron. The sale is worth P22.5 billion at around P6 per share. Saudi Aramco is a state-owned oil company of Saudi Arabia.

The Petron deal was negotiated amid record high oil prices in the global and local markets. In the past two weeks alone, three rounds of oil price hikes have been recorded.

Bayan noted that the agreement has been deliberately kept from the public because of popular clamor to de-privatize Petron amid high oil prices. “The Arroyo government let go of the chance to reclaim the largest oil refiner and retailer in the country. It did not even bother to consult the people. Apparently, Malacañang intends to let us know only when the deal has been sealed. It knows that there will be strong opposition not only from activists but from some policy makers, too”, said Dr. Carol Pagaduan-Araullo.

There have been calls from different sectors and several legislators for the government to buy back Petron. The move is seen as an important measure to protect the public from high and escalating oil prices. “Petron controls almost 37% of the market. It is one of only two refiners in the country. If government wants to make an impact on oil prices, the control of Petron is indispensable”, Araullo argued.

At present, the government through the Philippine National Oil Co. (PNOC) owns 40% of Petron. Saudi Aramco holds the other 40% while individual investors account for 20%. This set up came about after Petron was privatized in December 1993 pursuant to Republic Act (RA) 7638. The partial sale of Petron to the private sector was a prelude to the deregulation of the downstream oil industry in April 1996.

“PNOC should exercise its right of first refusal. It should not allow this chance for the government to increase its control of Petron to pass. Besides, what expertise does Ashmore have to run an oil company? As an investment firm, it will only make Petron more profit-oriented than it is now. It means higher oil prices and more price rigging”, maintained Araullo.

The group also urged Congress to rush the approval of House Bill (HB) 3031 which seeks to renationalize Petron. The bill was filed last November 2007 by party-list groups Bayan Muna, Anakpawis, and Gabriela Women’s Party.

Bayan said that the Arroyo government looks at Petron simply as an investment area for private business. This approach has had a serious impact on the people as oil prices continue to rise. “In the coming weeks, the public will again bear a fresh series of oil price hikes. Private companies see this as an opportunity to make more money. A state-owned oil firm, meanwhile, looks at it as an emergency that must be addressed. Currently, Petron plays the former. This thinking must change. Oil is too important a commodity to allow narrow private interests to prevail”, said Araullo.

The de-privatization of Petron is one of the urgent reforms that Bayan is seeking to protect the public from high and increasing oil prices. It also demands to remove the 12% value added tax (VAT) on oil and the repeal of the Oil Deregulation Law. (END)