By MAX ESTAYO

The government cannot afford to buyback Petron shares its partner Saudi Aramco is selling.

A government-sponsored study pointed out that the government cannot put up the $550 million asking price of Aramco, since there is no outlay for that in the 2008 budget.

The study also pointed out that should the government buyback the shares, the oil company will be subject to procurement and salary standardization required of government owned or controlled corporations.

This limitations will hamper the company's agility to compete in a free market. The government likewise cannot afford to subsidize losses from Petron since the oil price stabilization fund (OPSF) has been scrapped.

With the government backing out of the buy-back plan, the Ashmore Group stands to own the 40-percent Aramco shares.

The British firm in March announced interest to buy the shares for $550 million.

However, under the sales agreement with Aramco, the government, through PNOC, has the right of first refusal for the shares. Meaning, it could opt to buy back the shares.

The government has 60 days or until May 12 to exercise the pre-emptive rights.

Sources at PNOC said earlier the government is thinking of re-acquiring the shares. That may be lumped with the 40 percent it currently owns and then sold as a block for which it could command a good price.

Government sources said other groups, including the Gokongweis, had expressed interest for the Aramco shares but this can't be accommodated because of the long process involved in public bidding and the deadline is already forthcoming.

The same sources said the government is settled with Ashmore since it is a financially strong company with nearly $40 billion in assets under management.

Its financial muscle could support Petron's expansion and that being privately controlled, Petron can efficiently perform and compete in the deregulated market.