Shell’s overdue IPO: A test of Duterte’s political will

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A CRUCIAL test of incoming President Rodrigo Duterte’s political will is whether he can stand up to Pilipinas Shell Petroleum, the local subsidiary of Royal Dutch Shell plc., and give the Dutch oil giant an ultimatum: follow the law by conducting the long-delayed initial public offering (IPO) before the end of the year or close down its Batangas refinery.

We recall that during the campaign, Duterte was portrayed by his rabid supporters as “a strong leader, a leader with political will, someone who is not afraid to implement the law without fear or favor, no matter who gets hurt in the process.” Well, in the case of Shell’s pending IPO, Duterte only needs to do precisely that: implement the law without fear or favor—and soon.

For almost two decades now, Shell has managed to avoid its duty under the 1998 Oil Deregulation Law to sell at least 10 percent of its common stock to Filipino investors via public listing. That it was able to postpone its IPO indefinitely since 1998 through four Presidents—Fidel Ramos, Joseph Estrada, Gloria Macapagal Arroyo, and Benigno Aquino 3rd—is a classic example of how many multinational companies and big business conglomerates have co-opted our top government officials as well as regulatory agencies such as the Department of Energy (DOE).

Many ordinary folks we’ve talked to are hopeful that Duterte, whose “change is coming” platform promised an iron-fisted approach to lawbreakers, can finally put an end to Shell’s audacity.


During the past 18 years, Shell has frequently issued “press releases” regarding its supposed commitment to publicly list its shares while, at the same time, coming up with a litany of excuses ranging from low oil prices and regulatory issues to unfavorable stock market conditions in order to put off its IPO.

Late last year, for instance, Shell Philippines Chairman Edgar O. Chua announced that the company was “preparing a lot of things [for the IPO]including the regulatory requirements of the PSE (Philippine Stock Exchange) and the SEC (Securities and Exchange Commission) as well as the road show requirements.”

“We already have a financial advisor. So we’re now preparing. By next year (2016) hopefully, (we will proceed) either before or after the (May presidential and national) elections,” Chua added.

And as recent as two months ago, Chua announced once again that the company was “working on an IPO sometime this year” (i.e., 2016). Only this time, Chua had a different kicker.

He says “what [Shell] just needs to know is if the market is good,” adding that the company cannot proceed with its maiden share sale if this condition is not met.

By laying out preconditions for its IPO, it is clear Shell has no intention of going public, period. The Dutch oil giant obviously wants to operate its very profitable business in the country without the prying, meddlesome eyes of Filipino shareholders, just as it had done for almost two decades now.

Our colleagues in the legal profession, however, have gone over the 1998 Oil Deregulation Law many times, and they all agree that there is nothing in the bill which gives oil refiners like Shell a choice of whether or not to publicly list its shares. They point out that the law, in fact, states, “shall make a public offering”—rather than “may” make a public offering—to emphasize the compulsory nature of Shell’s IPO.

There is a public welfare motive for this mandatory public listing.

As our Times editorial once said, “The ‘public float’ provision in the Oil Deregulation Law is a vitally-important protector of public interest. With the removal of a great deal of the regulatory constraints on the oil industry—a generally prudent move that encourages industry growth and helps to ensure reliable supplies of fuel and other petroleum products—mandating a public stake in the industry, even a small stake, serves as a kind of check against the worst kinds of monopolistic abuse that could otherwise be carried out by fully-private companies.”

But at its root, the issue of Shell’s overdue public listing is not just about protecting public interest. It is also not even about opening up ownership of private enterprises to common Filipinos. What Shell’s long-delayed IPO really depicts is the corruption of our regulatory institutions and the rule of law.

Every day that Shell is able to dodge its public listing responsibility is a mockery of our laws. It sends the message that big multinational companies like Shell are untouchable and above the law.

Will Duterte and his Energy Secretary-designate Alfonso Cusi succeed where their predecessors have failed? Or will they, too, succumb to the persuasive powers of Shell?
Abangan ang susunod na kabanata!

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1 Comment

  1. There are now several oil companies in the country for a healthy competition. Threfore think we can afford to CLOSE Shell. The CROOKs in govt must be receiving a lot so as not to enforce the law.