PNOC on the spot

‘If it decides to waive its right, the suspicion will inevitably arise that somebody is lobbying for Ashmore.’

The bloc was sold to Aramco during the time of President Fidel Ramos to ensure the crude supply for Petron’s refinery in Bataan, which supplies 40 percent of the country’s requirement for finished oil products. Aramco, howevear, has decided to restructure its global business, and maintaining a stake in Petron does not fit into its long-term goal.

That’s a purely business decision of Aramco. The striking price with the proposed buyer, the global hedge fund Ashmore, is $550 million, more or less the same price at which it bought its holdings. The original deal with Petron, however, gives the latter the right to match any offer for the 40 percent bloc.

As we see it, the decision whether to buy back Aramco’s share should be purely business. Is the 40 percent bloc worth only $550 million or is it worth much more? If the latter is the case, then it’s a no-brainer. The government’s claim that it does not have that kind of money does not wash. The Development Bank of the Philippines is awash with cash. The intention is to make a fast turnaround. As we earlier said, a few hundreds of million pesos does not grow on trees. And nobody goes to the poor house by making a profit.

Now it turns out that the right of first refusal can be assigned to a third party. So the argument that the government does not have the money is not even relevant to the discussion.

Early this week, the Gokongwei Group introduced a wild card when it offered to buy PNOC’s remaining 40 percent stake in Petron (small investors hold the remaining 20 percent). The Gokongwei offer was for P24.56 billion. That’s P1.22 billion more than Ashmore’s offer of P23.56 billion based on the exchange rate of P42.45 to the dollar.

That puts PNOC on the spot. If it decides to waive its right, the suspicion will inevitably arise that somebody is lobbying for Ashmore which was actually the talk of the town when the Aramco-Ashmore deal was announced two months ago.