"I think, they (oil refiners) should be compelled (to undertake their public offering). It is stated under the (Oil Deregulation) law that they should offer 10 percent of their stake through an initial public offering (IPO)," Concepcion said.
Under the Oil Deregulation Law of 1998, "any person or entity engaged in oil refinery business shall make a public offering through the stock exchange of at least 10 percent of its common stock within the period of three years from the effectivity of the Act or the commencement of its refinery operations."
Concepcion said besides, the two remaining oil refiners yet to list their shares in the Philippines Stock Exchange (PSE)- Pilipinas Shell Petroleum Corp. and Caltex Philippines Inc.– have posted huge profits for the past years.
As a chairman of the Consumer Oil and Price Watch (COPW), Concepcion supports the efforts of the DOE to seek legal means to force the two oil firms to list their shares in the local bourse.
He also believed that the market could absorb the IPO of the two oil firms. "The market is ready for them," he said.
Energy Secretary Vincent S. Perez, for his part, said they have taken this matter during their recent Cabinet meeting.
Perez said they are trying to "get the Department of Justice (DOJ) on our side" before making any bold step.
"We want to make our negotiating leverage stronger before taking necessary moves on the oil firms‚ IPO," the energy chief said.
Perez said the DOE had met with officials of the PSE, Securities and Exchange Commission (SEC), Board of Investment executive director Greg Domingo, and DOJ.
"During the meeting, we discussed areas that we would pursue in requiring the two oil refiners Shell and Caltex incuding legal options available for the government," Perez said.
Last October, the DOE came up with Department Circular No. 2002-10-006 mandating the imposition of a hefty P50,000 penalty for each day of delay from the date determined by the Secretary of Energy for the holding of said IPO.
So far, Petron Corp., the country’s largest oil refiner and market leader, is the only oil refiner listed in the PSE.
Before the lapse of the supposed three-year period for the oil refiners to submit themselves to an IPO or by February in 2001, both Caltex and Shell have been asking for an extension to comply with the provision of RA 8479.
The two oil firms were able to defer their IPO plans after securing a DOJ opinion that says that the Oil Deregulation Law is not mandatory bit rather directory in nature.
In a DOJ Opinion No. 6, signed in February 2001 or just in time for the expiration of the supposed IPO schedule set by law, specifically states that „the conclusion that the intention of the law is to broaden the base of ownership of oil companies and that the three-year period fixed therein should be construed liberally, hence, the IPO could still be conducted after the lapse of the said three-year period."
„Based on the prevailing economic conditions, it is expected that an IPO at this time may well fall short of the norms of a successful offering both in terms of pricing and distribution if undertaken within the period,‰ the DOJ opinion said.
The DOJ further noted that „there is no sanction provided in the law for non-compliance with the IPO requirement within the prescribed period.‰ /30
PHILIPPINE STAR/BUSINESS/SEPT. 8, 2003 (SUN. FOR MON.)
FROM: DONNABELLE L. GATDULA
To help resolve the impending power crisis in the South, the Power Sector Assets and Liabilities Management Corp. (PSALM) and the National Power Corp. (Napocor) have given the go signal for the construction of the $305 million (MW) Mindanao Coal Power Plant. (MCPP).
Napocor and PSALM last week signed the acknowledgment and consent agreement (ACA) which will allow the State Power Development Corp. (SPDC), the operator of the project, to push through with the putting up of the 200 MW coal facility inside the Philippine Veterans Investment Development Corp. (Phividec) Industrial Estate in Mindanao. The ACA is one of the requirements of the project lenders.
The project will be 70 percent funded through loan and 30 percent equity. Among the lenders of SPDC include: Japan Bank for International Cooperation (JBIC), Nippon Export and Investment Insurance Corp. (NEXI), Kreditanstalt fur Wiederaufbau (Kfw), Bayerische Hypo-und Vereinsbank AG, and Dresdner Bank AG.
The government has started negotiations with SPDC, composed of stakeholders State Investment Trust Inc. (SITI) and Harbin Power Engineering Co.- in June 1998 but the purchase power agreement (PPA) with Napocor took effect in March 2001. MCPP is included in the list of independent power producer (IPP) contracts of Napocor that are being re-evaluated and renegotiated by PSALM. Based on the PPA signed by Napocor and SPDC, the state-owned power firm does not guarantee a minimum off-take under the PPA but will endeavor to dispatch the plant at 80 percent of the plant‚s capacity. If Napocor dispatches the plant at less than 45 percent, SPDC has the right to shutdown the plant while continuing to receive capacity payments based on the PPA provisions. After the financial close, A Germany-based power giant STEAG Ag will buy about 89 percent stake in the SPDC. The remaining 11 percent of the company will be owned by SITI. Harbin Engineering, on the other hand, will apparently divest its share in SPDC. STEAG is a leading German IPP company which ranks among the top five German power companies in terms of capacity and power generation operating about 5,500 MW, most of which are coal-fired. STEAG is wholly-owned by RAG Ag, one of the world‚s largest coal companies. Napocor sources said the entry of STEAG into SPDC is part of its active international expansion and diversification strategy. At present, STEAG owns and operates a 150 MW power plant in Colombia and is currently constructing a 1,210 MW power facility in Turkey. SPDC awarded the project‚s engineering, procurement and construction contract (EPC) to Nissho Iwai Corp. and Kawasaki Heavy Industries Ltd. for the construction of the power plant, jetty and the five-kilometer transmission line to connect the plant to the Mindanao grid.
The MCPP, which will be completed in three years, will source its coal requirement from PT Jorong Barutama Greston. The Indonesian coal firm has a proven operating track record since 1998 and has a commercial production capacity of three mullion metric tons per year.
Aside from helping avert the power crisis in Mindanao, the MCPP is expected to mitigate the impact of insufficient and unpredictable water resources and the consequential volatility in generating capacity of the hydro power plants in the island.
MCPP will also reduce the country‚s dependence to imported fuel oil-run power plants./30.