When a company makes billions of pesos in profit in the Philippines but intentionally refuses to obey the law requiring it to share its profits with Filipinos, isn’t that plain and simple exploitation?
Well, that’s exactly what oil giant Shell Philippines has been doing.
Shell is the country’s third largest corporation by revenue. In 2011, it earned a humungous profit of P4.694 billion. That comes as no surprise since Shell is one of the so-called “Big Three” oil majors, which collectively control nearly 70 percent of the domestic market for petroleum products.
Aside from Petron, Shell is also the only other oil industry player operating a refinery in the country. But that’s where their similarity ends.
Since the passage of RA 8479 or the Downstream Oil Industry Deregulation Act more than 15 years ago, Shell has refused to comply with the law’s provision requiring oil refiners to publicly list “through the stock exchange…at least ten percent of its common stock.”
And for the past 15 years, top officials during the Estrada and Arroyo administrations—and the current PNoy government—have all refused to enforce the oil deregulation law against Shell let alone compel the oil giant to conduct its initial public offering (IPO). This notwithstanding the fantastical and rehashed excuses given by Shell as to why it couldn’t comply with the IPO requirement.
At a press briefing soon after the Aquino administration took over in 2010, Edgar “Ed” O. Chua, country chairman of Shell Companies in the Philippines, cockily told reporters that they have “the usual answer” to the IPO question.
“We continue to review that option. Remember, the law requires an IPO if you are an oil company with refinery . . . We continue to review the future of our [Tabangao, Batangas] refinery. At the moment, we still have not made a firm decision either way,” Chua said.
Chua’s candid remarks are quite telling. Despite admitting that an IPO is a legal requirement for oil refiners like Shell, he nevertheless views such requirement as a mere “option.” In other words, for Shell, it can choose whether or not to obey the law.
This explains why Shell seems to be taking its sweet time to publicly list its shares.
Last June 2013, Shell’s Chua asked the Department of Energy (for the nth time) to give it more time to submit the plan for an IPO because it was supposedly still finalizing the study on the Tabangao refinery upgrade.
In February this year, Chua claimed that it was awaiting—not a study—but a so-called “final investment decision” (FID) for the Tabangao refinery expansion. “Assuming that we get the FID, we will start working on the IPO. But the timetable will still depend on favorable market conditions,” Chua said.
During a media forum in June, Chua told reporters that they were preparing for an IPO. But after the forum, Chua changed his tune saying the planned IPO would be pursued “hopefully this year,” adding that the listing would (again) depend on market conditions. Sounds familiar?
It’s almost the end of the year and nothing has happened with Shell’s “promising” IPO.
So what’s Energy Secretary Jericho Petilla’s reaction to Shell’s long-delayed public listing?
“[Shell] has to do the IPO but I’d like them to expand first before I press them for anything else,” Petilla said. In other words, for Petilla, it’s okay for Shell to disobey the law so long as it expands its Tabangao refinery. Susmaryosep!!
What’s also quite infuriating for many folks is that the law is very clear. If Shell continues its oil refinery business, it must list its shares. Not tomorrow but 15 years ago. Clearly, however, the Dutch oil giant wants to continue its very profitable refinery operations in the country while avoiding an IPO at all costs.
Although Shell tries to portray itself via multimillion-peso print and TV advertisements as a socially responsible company that has supposedly “always done all to help empower Filipinos,” the truth is that its only concern is profits. Obviously, the IPO would force Shell to share not only its profits—but even its records—with “outsiders,” that is, ordinary Filipino consumers.
In contrast, when it comes to cornering highly profitable ventures, Shell is only too eager to jump the gun on the government and the largely ignorant public.
For instance, the Dutch oil giant is already pushing for the 15-year extension of its Malampaya service contract to 2039 even though the contract isn’t set to expire until 2024, or ten years from now. According to Shell, it wants to do more exploration and has planned more investments for the project.
But if Shell can’t even obey our laws, how can we believe it will follow through on its investment pledge?
The way we see it, the proper thing to do when the Malampaya service contract expires in 2024 is to auction it off to other oil industry players who will give the country better terms—and follow our laws. We don’t need law breakers exploiting and profiting off Filipinos’ patrimony.