Pilipinas Shell Petroleum Corp., the local unit of Royal Dutch Shell Plc, is planning to complete its refinery update study first, which is seen to be completed by the end
of the year, before polishing its plans for an initial public offering (IPO).
Pilipinas Shell spokesman Bobby Canapi told reporters in a forum that the company is conducting a study on its refinery update, and the plan is to finish this before proceeding with IPO plans.
“We are conducting that study on the refinery following the completion of the standards for Euro 4 in the Philippines,” Canapi said.
This is in response to the Department of Energy’s (DOE) letter to the company, asking Pilipinas Shell for updates on its public listing plans.
Canapi said that the company will write a reply to the DOE some time next week.
“We are now finalizing the study on upgrading the refinery and we will write to the DOE to request them to give us time up to the later part of this year [to finish the study],” he said.
“Everything hinges on. We’re doing studies on upgrading the refinery and the law states that if you have a refinery you should commit 10 percent,” Canapi added.
He reiterated that the refinery study is ongoing, and the reason that it got delayed is because Pilipinas Shell waited for the specifications of Euro 4, which is a globally accepted European emission standard for vehicles, which require fuel with significantly low amounts of sulfur and benzene.
Pilipinas Shell, in the previous year, announced its plans to spend as much as $150 million to upgrade its refinery in Batangas province.
Late last week, the DOE called on to Pilipinas Shell to undertake its public listing immediately, as the IPO has long been overdue since the oil firm is mandated to be a public company since 2002.
Energy Secretary Carlos Jericho Petilla told reporters that the department has sent a letter to Pilipinas Shell to remind the oil company to do its public offering in compliance with the Downstream Oil Industry Deregulation Act of 1998.
The DOE is seeking Pilipinas Shell’s plans for its much-delayed IPO because, according to Petilla, the department “cannot take any action at this point until we receive a reply from them.”
In its letter to Pilipinas Shell dated May 14, the DOE cited that “while the opinion of the Department of Justice is that three-year period under the Oil Deregulation Law is not mandatory, but prescriptive and will not prohibit an IPO to be conducted after lapse of the said period, nearly 15-year period since the passage of the law is long overdue for the company to implement the public offering of 10 percent of its common stocks.”
“Given also that the equity/financial market environment in the country is currently healthy, which attracts potential investors, you are hereby requested to submit an update of your IPO plans,” Zenaida Monsada, DOE Oil Industry Management Bureau director, said in her letter to the firm.