owned Philippine National Oil Co (PNOC) said it will not exercise its preemptive right on the $550 million sale of Saudi Aramco's 40 percent stake in oil refiner Petron to investment fund Ashmore Group. PNOC also holds 40 percent of Petron and has first rights on any sale of Aramco's stake, but chose at a board meeting on Monday to allow the deal with the London-based fund to go ahead, officials said. “We based our decision on a number of factors including the fact that the purchase of these shares by the government runs contrary to our policy of privatizing government stakes in corporations and letting the private sector run commercial enterprises,” Energy Secretary Angelo Reyes said in a statement after the meeting. PNOC also did not exercise an option to transfer the right to purchase the stake to a third party. Reyes said last week that Morgan Stanley had approached PNOC with an offer to buy the stake. Morgan Stanley was representing Thailand's PTT PCL PTT.BK, according to Rey David, president of state-run Development Bank of the Philippines, one of the financial advisers to PNOC. Last week, JG Summit Petrochemical Corp, owned by the Gokongweis, a local business family, said it was offering about 24.5 billion pesos ($575 million) for PNOC's stake in Petron. “I imagine PTT and JG Summit will keep their eyes open if and when the government decides to sell its shares in Petron,” David said. The Aramco sale to Ashmore is expected to be completed within 90 days. Neither party was immediately available for comment. Finance Secretary Margarito Teves said on Monday the government was keeping its options open on the possible sale of its Petron stake, but had not taken any decisions. “There is interest and the offer of Mr. Gokongwei is apparently better than what Ashmore has offered,” Teves told reporters. “If these indications are going to be followed by other interested groups, then there is a possibility that we may do better than what Ashmore has offered to Aramco.” The government relied mainly on the sale of state assets last year to cover for weak tax collection. Privatization proceeds, which reached more than 90 billion pesos ($2.1 billion) last year, are expected to fall to 30 billion pesos this year. “If the tax revenues are not adequate then we will resort to privatizations,” Teves said.
