Oil refiner Petron Corp. said Tuesday it signed a memorandum of understanding with SMC Powergen Inc., a subsidiary of SMC Global Power Holdings Corp., for the sale of Petron’s 140-megawatt solid-fired power plant in Limay, Bataan.
Under the MOU, SMC Global Power will conduct a preliminary review of the power plant and its operations over a six-month period to determine the feasibility of the acquisition.
The power plant, which has a rated capacity of 140 megawatts, supplies the power requirements of Petron’s 180,000 barrel-per-day refinery in Bataan.
Petron senior vice president and chief finance officer Emmanuel Eraña, Petron general manager Lubin Nepomuceno, SMC Powergen general manager Elenita Go and SMC Powergen director Ferdinand Constantino signed the agreement.
“This is the reason for the possible sale. Petron is looking to minimize capital being employed given the low refining margins affecting the industry,” the company’s largest oil player said in a statement.
San Miguel Corp. is the parent company of both Petron and SMC Global Power.
Petron booked a net income of P2.6 billion in the first half, or 72 percent lower than its P9.5-billion net income in the same period last year.
“These setbacks are just temporary and are all part of the business. We remain optimistic for the second half of the year given signs of modest recovery from gasoline and petrochemical margins recently seen in the market,” Petron president and chief executive Ramon Ang said earlier.
The company said the first-semester results reflected modest gains amid the slump in regional refining margins that affected its Philippine operations by as much as P5 billion during the period.
Consolidated sales revenues went down 7 percent in the six-month period to P254.8 billion from a year ago.
The company said that while Malaysian sales volume grew 4 percent, the decrease in Philippine sales reflected the decline in volume following the implementation of the second tranche of the tax reform program.
The implementation of the second tranche of the Tax Reform for Acceleration and Inclusion law brought total fuel taxes to an average of P6.75 per liter or equivalent to more than P15 billion in excise taxes in the first half.
Petron said such developments “encouraged illegal business practices during the period.”
The company, however, continued to pursue its network expansion program, completing 72 stations in the Philippines in the six-month period.
Petron also rolled out 24 new stations in Malaysia to reflect its growing market share.
Petron is the largest oil refining and marketing company in the Philippines and is a leading player in the Malaysian market. It has a combined refining capacity of 268,000 barrels per day and produces a full range of fuels and petrochemicals. It has more than 3,000 service stations in the two countries.