The government may not have to borrow up to $750 million overseas this year whether or not it successfully sells its stake in oil refiner Petron Corp. before yearend, National Treasurer Roberto Tan said.
“We don’t need to borrow overseas. We have enough buffer for any scenario,” Tan told reporters yesterday, adding that the government has a strong cash position.
Finance officials earlier said the government may borrow from the overseas debt market this year if it increases the overseas portion of its planned borrowings.
Every year, the National Government has to borrow to refinance maturing obligations. Maturing foreign obligations are normally paid in dollars and since it is still in deficit, the government ordinarily borrows offshore to meet these obligations.
Tan said the government’s final decision to borrow does not depend on the sale of its stake in Petron, the country’s largest oil firm.
The government has given the London-based Ashmore Group until December 5 to exercise its right of first refusal on the government’s 40-percent stake in Petron.
So far, the fund manager which now owns over 50 percent of Petron, has not exercised its right.
The government hopes to sell its 40- percent stake in Petron before the end of the year after the Finance Department-led privatization council approved the sale last September.
The government has decided to sell its stake in Petron, considered a crown jewel in the oil industry, to raise revenues for social services and infrastructure projects. It hopes to raise roughly P25 billion from the transaction and hopes to book the revenues by this month.
The Ashmore Group earlier purchased the 40-percent stake of Saudi Arabia-based Aramco Overseas Co. in Petron for $550 million.
Acquiring the government’s stake will give Ashmore over 90 percent and full control of Petron.
The government’s sale of its stake in Petron, meanwhile, will end an era of state control in the oil refining business which started in the early 1970s.
Several groups have already signified its interest to buy the government’s 40- percent stake in Petron.
If the government successfully sells Petron, it would be on track with its program to contain the budget deficit at P75 billion for this year.