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Petron’s P3-B Bataan refinery infusion signals business resumption — analysts

PETRON Corp.’s additional investment of P3-billion in its Bataan refinery and its registration as an enterprise in the province’s freeport area are a big boost to the oil company’s operations while easing its tax concerns, analysts said.

“Petron’s infusion of a considerable amount of money to improve its refinery operations after it secured approval from the freeport authority of Bataan signals its interest in revitalizing its operations and pursuing future economic gains,” said Cid L. Terosa, senior economist at the University of Asia and the Pacific (UA&P) School of Economics.

“It’s a business opportunity that Petron won’t pass,” he told BusinessWorld in an e-mail on Tuesday, adding that the move signals the firm’s interest to continue operations.

Earlier this week, the Ramon S. Ang-led firm said that it had infused around P3-billion to improve refinery operations in its Bataan plant, after securing approval from the Authority of the Freeport Area of Bataan (AFAB) to register as an enterprise.

This came after Petron said last month that it would be halting its 180,000-barrels-per-day plant operations in Bataan starting 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 market factors and a sustained improvement in oil demand would play a role in determining the refinery’s financial viability.

“The AFAB registration of the firm’s refinery facility (which) allow(s) the firm avail certain tax perks and capital investment commitment is an encouraging sign with regard to the prospects of the Bataan facility’s continuing operations,” he said.

Christopher John Mangun, AAA Southeast Equities, Inc. head of research, said Petron’s decision to register as an enterprise in the Bataan freeport would help the firm mitigate its tax concerns.

“The Petron facility’s inclusion in the freeport of Bataan will address their concerns of higher taxes compared to importers of finished products, which is why the permanent closure was reduced to a temporary closure of 4 months,” he said in an e-mail on Tuesday.

He said, however, that the closure could be extended if the fuel demand remained low.

“The only reason for them to resume sooner is if fuel prices continue to rise. Gas prices are currently at a 12-month high and may continue to go higher,” he added.

BusinessWorld reached out to Petron for a comment about the schedule of its refinery’s shutdown, but has yet to receive a reply as of press time.

In the third quarter last year, Petron posted an attributable income of P1.33 billion, up 49.8% year on year and primarily driven by retailing margins. The quarter’s profit was a reversal of the second quarter’s net loss of P9.15 billion attributable to the parent equity holder.

For the nine months to September, the company recorded an attributable net loss of P12.44 billion, reversing the earlier year’s P3.11-billion income.

Shares in Petron on Wednesday inched down 0.5% to close at P3.95 apiece. — Angelica Y. Yang

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