Government books proceeds from sale of Petron

The National Government (NG) has already booked the proceeds from the sale of its 40 percent stake in Petron Corp., significantly boosting state coffers, National Treasurer Roberto Tan said yesterday.

“The proceeds will augment revenues of government for the whole of 2008 and will help in the achievement of fiscal targets,” Tan told reporters.

The government has sold the 40 percent stake of the Philippine National Oil Co. (PNOC) in Petron to the Ashmore Group for P25.7 billion.

PNOC president and chief executive officer Antonio Cailao said Ashmore finalized the payment last Dec. 23 and that the proceeds had been remitted to the Treasury on the same day.

Of the P25.7 billion, PNOC got P4 billion which is PNOC’s cost of investment in Petron, Cailao said. Roughly P700 million would be used to pay other expenses related to the sale such as financial advisory costs.

The advisors of the sale include the Development Bank of the Philippines and Citibank.

Cailao also said the government was able to sell its Petron stake at a premium or at P6.85 per share. This is higher than the market price of Petron of P5.50 per share when Ashmore bought the stake of Saudi Aramco in the oil firm early last year.

“The market price went up from P5.50 per share. That’s a 32 percent market premium. At the time when the market is dead and dysfunctional, we were able to sell it way above the market price,” Cailao said.

Cailao also spearheaded in 2007 the successful sale of the government’s stake in PNOC-Energy Development Corp. to a consortium led by First Gen Corp.

Prior to its acquisition of the government’s stake in Petron, the Ashmore Group, which is represented in the country by former Trade Minister Roberto “Bobby” Ongpin, already owns 51 percent of the oil company after it acquired the 40 percent stake of Saudi Arabia-based Aramco Overseas Co. in Petron for $550 million and made a tender offer to other shareholders early 2008..

The move to acquire the government’s 40 percent stake in Petron now gives Ashmore a controlling stake in Petron as it would increase its ownership in the company to roughly 90 percent.

However, the San Miguel Corp. had already entered into an agreement with the Ashmore Group to buy 50.1 percent of the PNOC block.

With the transaction, Tan said the government is on track to meeting its programmed deficit ceiling of P75 billion for 2008. The government gave the Ashmore Group until Dec. 5, 2008 to exercise its right of first refusal on the PNOC block in Petron.

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.