MANILA, Philippines — Petron Corp. will still shut down temporarily its refinery in Bataan despite clinching registration under the Freeport Area of Bataan.
In a disclosure to the Philippine Stock Exchange yesterday, Petron said the Authority of the Freeport Area of Bataan (AFAB) approved its application to be one of the registered enterprises of the freeport zone.
It said the AFAB registration of the refinery “will help make its refining business more competitive by improving its financial viability in the long run and address some of its major concerns.”
With its registration approved, Petron said it would commit P3-billion in investments to improve its refinery.
“As part of its commitment to AFAB, the company is expecting to undertake in the next five years several capital investments amounting to nearly P3 billion to further improve the efficiency of the integrated operation of its Petron Bataan Refinery,” it said.
Earlier, the oil firm said reclassifying the refinery under an economic zone could avert its shutdown, which was supported by the Department of Energy (DOE) and Petron Refinery employees to save their jobs.
But despite the registration under FAB, Petron will still proceed to shut down its refinery operations.
“…considering that the refining business remains challenging both here and around the world, the plan for the refinery to undergo an economic plant shutdown early this year will still proceed,” it said.
During this economic shutdown, the company will conduct maintenance activities on key process units.
Petron president and CEO Ramon Ang, however, said the shutdown is not permanent and refinery operations would resume if the demand and the economy improves.
Petron earlier announced that its refinery in Limay, Bataan would be on economic plant shutdown beginning the second half of January.
The country’s largest oil refiner and marketer had previously cited that there is no level playing field between importers and refiners in terms of taxes.
Ang had stressed that the heavy taxes paid by refiners, as compared to oil importers is making refining a difficult business to be in.
He said refiners pay value-added tax (VAT) and excise tax, among others, when they import crude oil into the country, and then pay another round of taxes after processing and selling their products to the local market.
With the fluctuations in global oil prices, Petron has also incurred significant losses.
As of end-October 2020, Petron closed the period with a net loss of P12.6 billion from a net income of P3.6 billion in 2019. Consolidated revenues also declined 43 percent to P216.4 billion from last year’s P381.7 billion.
However, Ang said the closure of refineries is not unique to the country as the global refinery industry has been a tough business, especially with COVID-19 pandemic.