Thursday, April 8, 2021

Pilipinas Shell sets P20B for 5-yr growth plan


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Banking on the country’s potential economic growth, Pilipinas Shell Petroleum Corp. is investing up to P20 billion to fuel its growth strategy over the next five years.

A huge chunk of the listed oil company’s capital expenditures (capex) will go to the expansion of its retail network and the construction of two more import terminals.

“In terms of investment, we are hoping that we will be able to continue with our investment profile of anywhere between P3 billion to P4 billion per year for the next five years so consistent lang (so it is consistent),” Cesar Romero, Pilipinas Shell president and chief executive officer, said in a virtual briefing held on Wednesday.

Of the total amount, Romero said around 60 percent of the five-year capital outlay — approximately P1.8 billion to P2.4 billion annually — will be allotted for its retail business now dubbed as its mobility business.

Pilipinas Shell aims to construct 60 to 80 new mobility stations, a combination of new sites and refurbishments, to reach its overall target of 1,500 mobility sites by 2025.

Likewise, Pilipinas Shell is planning to construct two more medium-range (MR) import terminals over the five-year period.


At present, the listed firm is operating three MR-capable import terminals in Batangas, Cagayan de Oro, and Subic.

“It seems like the projected greater economic growth will be in Visayas and Mindanao so therefore, the next two import facilities are expected to be located there,” Romero said.

“It does not mean that we will preclude any further investments in the north should growth be actually in the north. We actually follow where we believe the economic activity will go,” he said.

“We are open-minded but we believe that five is the good number to allow us to have a network of import facilities,” Romero added.

Pilipinas Shell will continue the transformation of its refinery in Tabangao, Batangas into a full import facility.

“We will continue to enhance Tabangao,” said Romero. “At the moment, what we have seriously identified is around P1 billion to P2 billion for the next three years to really make it into a world-class import facility.”

In August last year, Pilipinas Shell announced the permanent closure of its Tabangao refinery and its intention to transform it into a world-class full import facility.

With the new game plan in place, Romero said this would enable them “to invest more in our very profitable retail now called mobility business and also to improve the efficiency of our supply chain.”

Reynaldo Abilo, Pilipinas Shell treasurer, vice president for finance, and chief risk officer, said the five-year investment will be financed through internally generated funds.

“Based on our own internally generated funds, most likely that will be able to generate sufficient cash flow from operations to fund those investments. So far, (there is) no need to borrow,” said Abilo.

Pilipinas Shell is hoping to return to the positive territory this year.

Abilo said, “we are hopeful about the economic recovery from this pandemic and with our strategy in place, we should be able to hopefully go back to profitable levels.”

Pilipinas Shell incurred a net loss of P16.2 billion in 2020, of which P12 billion represents one-off charges related to the Tabangao refinery shutdown and another P4.8 billion due to the drastic decline in crude prices.

“Hopefully, these are one-off (charges) and we will not have that again in 2021,” said Abilo.
Pilipinas Shell shares inched up by 20 centavos or 0.99 percent to end at P20.50 each on Wednesday.



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