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Petron pays Holcim P7/kilo to take oil debris

October 17, 2006

By HAZEL P. VILLA
Panay News, Oct. 17, 2006

ILOILO City – Amid pressure from Guimaras residents and authorities, a total of 3,662 metric tons of oil debris from Guimaras has been shipped to a cement factory in Lugait, Misamis Oriental to be used as “alternative fuel and raw material” for making cement.

Barges Ras and Martam left Guimaras on Oct. 13 carrying a total of 1,750 metric tons while Light Cargo Tanker (LCT) Harmony Diane with 300 metric tons left Guimaras on Oct. 14.

The vessels are expected to arrive at the cement factory in two to three days depending on weather conditions, said Felimon Antiporta, vice president for supply and operations of Petron Corp. that contracted the vessels.

Earlier at the end of September, LCT Carmen has delivered 1,483 metric tons while LCT Millennium Uno arrived at Holcim Philippines Inc.’s cement plant in Mindoro on October 11 loaded with 12, 979 sacks of oil debris weighing 129 metric tons.

The shipment of the debris came in the heels of complaints from Guimarasnons that it is taking a long time for Petron to take out the debris from oil-smeared areas.

“The sludge could affect our water sources and the immediate surroundings. Since day one of this disaster, we have urged the government and all those involved to ship out the collected sludge. Definitely, we will not allow them to bury their trash here,” Nueva Valencia mayor Diosdado Gonzaga told reporters here.

The Guimaras town of Nueva Valencia is one of three hardest-hit towns after Petron-chartered MT Solar 1 carrying 2.19 million liters of bunker fuel oil sank in the waters of the Panay Gulf in southern Guimaras on August 11, 2006 amid rough seas and bad weather.

As of September 22, 2006 in its latest situation update on the oil spill, the National Disaster Coordinating Council outlined the affected areas in the Guimaras towns of Nueva Valencia, Sibunag and San Lorenzo; and the northern Iloilo towns of Ajuy and Concepcion.

Affected ecosystems in the above places are coastline of 234.84 kilometers, coral reef of 15.80 square kilometers, 478.48 hectares of mangroves, 58 hectares of seaweeds and 806.29 hectares of fishponds, and 1,143.45 hectares of marine reserve of the Department of Environment and Natural Resources in Nueva Valencia.

CEMENT PLANT

Holcim buys the oil debris from Guimaras at seven pesos per kilo, said Antiporta.

“There was a delay in removal of the debris from Guimaras because of the difficulty in getting barges. Permits, approval, papers have to be in order even if we get delayed,” said Antiporta.

He added that the 3,662 metric tons of oil debris collected may be understated because there are still so many sacks waiting to be loaded.

In the permit to transport for Holcim released by the Environmental Management Bureau, the cement corporation is limited to the transport of 6,000 metric tons of oil-contaminated debris and is valid for six months from the date of issuance which is October 6, 2006.

Petron’s health, safety and environment manager Carlos Tan said their first option was to ship the debris to the much-nearer Apo Cement Corporation in Brgy. Tinaan in Naga, Cebu but Apo was upgrading its operations with a new computerized system.

“Apo Cement is nearer but they are upgrading. When I negotiated with Apo Cement before our first shipment in September, Apo has not yet stabilized operations,” said Tan.

In its web site, Holcim describes itself as “the leading cement manufacturer in the Philippines” that established its presence in the Philippine cement industry in 1974.

“Today, Alsons Cement Corporation and Union Cement Corporation have come together to move forward as a stronger Holcim Philippines,” said the web site.

Petron chairman Nicasio Alcantara’s family owns Alson’s Cement Corporation but Petron’s corporate office said that “as early as December 1998, the Alcantaras have divested themselves of holdings in Alsons. They have zero stake.”

The Alcantaras divested by tranches in 1998 and 1999. Alcantara joined Petron on July 31, 2001.

Holcim operates four major plants – one in La Union, another in Bulacan, a third in Davao City and the Lugait Plant in Misamis Oriental.

The plants account for a total installed clinker production capacity per year of 7.2 million metric tons and annual cement production capacity of 8.7 million metric tons, said the Holcim web site.

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THE question being…why pay Holcim when there were other takers of the oil sludge, for free? Petron can’t say that they never received offers, especially from an Australian company that Oliver Mendoza talks about in his blog. In fact, Mendoza talked about writing Petron executives about the offer, but no one bothered to respond to him.

Hmmm…that’s something Petron shareholders should be pressing its board of directors to explain, considering that the company has been hardpressed to achieve gains in its income. In fact it was only last year that Petron actually posted substantial profits. (No doubt due to its back-to-back increases in pump prices.)

Being a listed firm, there was no corporate disclosure on Petron’s financial deal with Holcim. Even if the Alcantaras no longer have a stake in Holcim via Alsons Cement, as the Petron slackers continue to adamantly protest, doesn’t the deal with Holcim still leave a poor taste in the mouth? Talk about corporate good governance, transparency and all that B.S. Petron loves to push in speeches and on its web site!

For a list of corporate disclosures by Petron, click Disclosures or go to the Phil. Stock Exchange web site.

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