Pilipinas Shell Petroleum Corp, the Oil refiner and retailer, seems to be in the Philippine government’s spotlight nowadays. One issue it is facing along with the other oil companies is the high price of LPG, which had been partially deflected to the LPG retailers and distributors. They are being accused of hoarding the cooking fuel to artificially inflate the price.
Issues facing the company directly however is its delay to list their shares in the Philippine Stock Exchange (PSE). Over ten years have already passed since Oil Refiners were required by the passage of RA 8479 (Oil Deregulation Act) to go public. Shell has admitted that they have no “final” plans as to their IPO citing that issues with the Supreme Court and their Oil Depot in Pandacan have complicated their plans.
The section of the Act which requires them to go on an IPO:
Sec. 22 Initial Public Offering - In compliance with the constitutional mandate to encourage private enterprises to broaden their base of ownership and in recognition of the vital role of oil in the national economy, any person or entity engaged in the oil refinery business shall make a public offering through the stock exchange of at least ten percent (10%) of its common stock within a period of three (3) years from the effectivity of this Act of the commencement of its refinery operations: Provided, That no single person or entity shall be allowed to own more than five percent (5%) of the stock offering: Provided, further, That any crude oil refining company and any stockholder thereof shall not acquire, directly or indirectly, any share of stock offered by any other crude oil refining company pursuant to this section: Provided, Finally, that any such company which made the requisite public offering before the effectivity of this Act shall be exempted from the requirement
Penalty for violations of the Oil Deregulation Act are:
SEC 24. Penal Sanction - any person who violates any of the provision of this Act shall suffer the penalty of three (3) months to one (1) year imprisonment and a fine ranging from fifty thousand pesos (P50,000) to three hundred thousand pesos (P300,000)
A copy of the Philippine Oil Deregulation Law can be found here in the DOE’s website.
The other issue facing the company is the accusation of the Bureau of Customs that they have failed to pay the government P11.271 billion in excise and valued added taxes (plus added penalties) for importing then selling unleaded gasoline for more than a year starting in October 2007. Shell meanwhile has countered that they have not been importing unleaded gasoline, but rather cat-cracked gasoline . This they then mix with gasoline from their refinery to produce Super Unleaded. Since it is not considered a finish product being imported, they are not subject to the said taxes.
With these issues facing the company now, aren’t they just happy they haven’t gone public yet? News like that could send their stock plummeting. Then again, with the sad state of the Philippine Stock Market right now due to the world wide recession, I doubt if that piece of news could bring their stock any lower.
The history of Shell in the Philippines dates all the way back to 1914. The company had set up a trading office to sell kerosene for household use. Aside from servicing the country’s fuel needs, they have also partnered up with the Philippine government to help develop its natural gas industry via the Malampaya natural gas field off the coast of Palawan. History of Shell in the Philippines can be found here.
Category: Oil, Law
