SMC wavers on Petron acquisition

San Miguel Corp. may abandon its plan to acquire a majority stake in Petron Corp. due to the ballooning losses at the oil refiner and distributor caused by the Philippine government’s temporary price freeze on petroleum products. Petron said it expects to lose Php1.5 billion (US$ 31.43 million) in the fourth quarter due to the effects of Executive Order No. 839, which mandated petroleum firms to keep prices pegged at their October 15 prices in response to the aftereffects of Tropical Storm Ondoy and Typhoon Pepeng. The order has come under intense criticism from local and foreign business groups, which have expressed fears of growing government intervention in the deregulated oil industry. Acquiring a controlling stake in Petron is expected to cost San Miguel Php32 billion (US$670.58 million), a deal that is now in question due to the declining attractiveness of the petroleum industry caused by the executive order, explained Ramon Ang, SMC president, who is also chairman of Petron. (November 3, 2009)