PETRON Corp.’s additional expenditure of P3 billion in its Bataan refinery and its recognition as an entity in the province’s free-port field are a significant boost to the activities of the oil business while easing its tax concerns, analysts said.
“Petron’s injection of a substantial sum of capital to boost its refinery operations after receiving permission from the Bataan Freeport Authority indicates its commitment in revitalizing its operations and targeting potential economic benefits,” said Cid L. Terosa, senior economist at the University of Asia and the Pacific (UA&P) School of Economics.
“It’s a market chance that Petron won’t pass,” he said to BusinessWorld in an e-mail on Tuesday, adding that the move signals the firm’s commitment in maintaining operations.
Earlier this week, the Ramon S. Ang-led company said it had infused about P3 billion to boost refining operations at its Bataan facility, after receiving permission from the Bataan Freeport Region Authority (AFAB) to register as an enterprise.
This came after Petron said last month that it will suspend its 180,000-barrel-per-day plant operations in Bataan beginning in mid-January for “maintenance activities on key process units.”
Rastine D. Mercado, research director at China Bank Securities Corp., told BusinessWorld in an e-mail on Tuesday that industry conditions and a sustained increase in oil demand will play a role in deciding the financial feasibility of the refinery.
“The registration by the AFAB of the company’s refining facility (which) enables the company to take advantage of some tax incentives and capital spending commitments is a promising sign with regard to the prospects for the continued activity of the Bataan facility,” he said.
Christopher John Mangun, Head of Analysis at AAA Southeast Equities, Inc., said that Petron’s move to file as a corporation in the Bataan Freeport would serve to alleviate its tax concerns.
“The addition of the Petron facility in the free port of Bataan would resolve their worries over higher taxes relative to importers of finished goods, which is why the permanent closure has been reduced to a temporary closure of 4 months,” he said in an e-mail on Tuesday.
He added, however, that the closure could be prolonged if the market for fuel stayed strong.
“The only explanation they will restart faster is if petrol costs begin to increase. Gas prices are now at a 12-month high and will continue to increase,” he said.
BusinessWorld asked Petron for a statement on the timetable for the closure of its refinery, but has yet to obtain a reply as of press time.
In the third quarter of last year, Petron had an attributable sales of P1.33 billion, up 49.8 per cent year on year and largely powered by retail margins. The quarter’s benefit was a reversal of P9.15 billion of the net loss of the second quarter attributed to the holder of the parent equity.
For the nine months leading up to September, the firm posted an estimated net loss of P12.44 billion, reverse the previous year’s revenue of P3.11 billion.