Shell’s ‘record-breaking’ IPO

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PILIPINAS Shell Petroleum Corporation (Shell) headed by Filipino country manager Edgar Chua has set a world record. No, not the kind you’d enter in the Guinness Book of World Records. This one is more suited for Ripley’s “Believe It or Not.” We’re talking about Shell’s record for the world’s longest initial public offering (IPO) in-the-making: 17 years and counting.

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For almost two decades now, Shell has come up with a catalog of excuses to avoid complying with Sec. 22 of the 1998 Oil Deregulation Law, which requires oil companies that operate refineries in the country to sell at least 10 percent of its common stock via a public offering.

The only other oil refiner in the Philippines, Petron Corp., which is owned by San Miguel Corp., had already publicly listed its shares way back in 2004.

Shell, however, doesn’t scare as easily as Petron when it comes to breaking our laws. The Dutch oil giant is so cocky that our government could not – or would not – force it to comply with the Oil Deregulation Law that it has managed to indefinitely postpone its IPO through four different administrations – the Ramos, Estrada, Arroyo and (the current) Aquino administrations.

What we find appalling is that officials of the Department of Energy (DOE) are even tripping over themselves defending and justifying Shell’s overdue IPO. Ironically, it is government regulators who now seem to be acting as the spokespersons for the Dutch oil giant.

During the sidelines of the LPG Philippine Forum in Bonifacio Global City last week, the director of DOE’s Oil Industry Management Bureau, Melita V. Obillo, was quoted as saying that “it [Shell’s IPO] will likely take place after the upgrade of its refinery.”

“Shell is also looking at market conditions before proceeding, so that is another consideration,” said Obillo. She added that Shell’s “IPO will definitely not happen this year.”

Not to be outdone, DOE acting secretary Zenaida Y. Monsada, says preparations are underway for the company’s listing. “They [Shell] have to submit documentary requirements for its IPO application and at the same time comply with the listing rules,” she said. “At the same time, Shell wants to make sure that the prospective investors will have good returns,” Monsada added.

We find it hilarious that DOE’s Monsada and Obillo appear to be more knowledgeable about the Dutch oil giant’s IPO plans than Shell itself.

In contrast, when sought for comment by reporters, all Shell Vice-President for Communication Ramon D. Del Rosario could say was that “Pilipinas Shell Petroleum Corporation is conscious of the obligation with regards to Section 22 of RA 8479.”

“[Shell] remains committed to comply with the Act,” Del Rosario curtly replied in a text message. The Shell official reportedly refused to give further information on its IPO plans.

Obviously, these statements from Shell are nothing but empty talk. What the Dutch oil giant is really saying is that they will comply with the law if and when they feel like it and there’s nothing this impotent PNoy government, the DOE or anybody else can do about it.

Of course, we already knew that Shell wasn’t going to do its IPO this year or next year. In fact, we predicted in our February 9, 2015 column that Shell will not go public by the time PNoy steps down in July 2016.

Here’s another fearless forecast: Shell will never conduct its IPO unless and until it is forced to by the Supreme Court, or by a lawsuit before the Ombudsman or the Sandiganbayan, or by a president with the political cojones to go against a big multinational conglomerate.

Unfortunately, this seeming deference (or subservience?) of government institutions to Big Business is an all too familiar refrain. Under this so-called “daang matuwid” presidency, the executive and the legislature have clearly been co-opted by vested interests in the energy sector.

Last week, the House Committee on Energy, chaired by Oriental Mindoro (and Liberal Party stalwart) Rep. Reynaldo Umali, abandoned its plan to amend the Electric Power Industry Reform Act (Epira) law. “When I learned that the private sector doesn’t want to support it [the amendment], I realized that it is no longer doable so I disintegrated it,” Umali said.

By private sector, Umali was referring to business groups like the Management Association of the Philippines, the American Chamber of Commerce, and the European Chamber of Commerce, who warned that amending the Epira might drive investors away. Not surprisingly, Umali’s move to abandon the Epira amendments garnered the support of DOE’s Monsada (yes, the same Shell apologist for the long-delayed IPO).

Mind you, this is the same Umali who, three months ago, vowed “to exhaust all means” to amend the “anti-people, pro-corporation” Epira “to ensure lower electric power rates and provide a stable and reliable electric power supply.”

But even as he lamented that the country has the highest electricity rates in Southeast Asia and the 9th highest in the world, Umali had no qualms about “disintegrating” much-needed changes to the Epira law.

And the ruling Liberal Party wants another 20 years in power?!!

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