Parent firm San Miguel Corporation (SMC) has injected P3.0 billion equity investment in Petrogen Insurance Corporation (Petrogen), a diversification venture of oil firm Petron Corporation into the insurance sector.
SMC said Petrogen is duly licensed and authorized by the Insurance Commission (IC) to engage in the business of providing insurance.
“With the investment, the Corporation will have direct equity interest in Petrogen, in addition to its current indirect equity interest through Petron,” the diversifying conglomerate noted.
San Miguel emphasized that the additional capital invested in Petrogen will enable the company to expand its operations in the insurance business.
Petron is currently the country’s leading oil firm with the highest number of retail stations under its portfolio; and it also operates the only surviving refinery in the country, although the refining facility’s continued existence is being threatened by taxation regimes that may not be beneficial for that kind of business model.
The downstream oil sector had been heavily strained by the Covid-19 pandemic, reaching breaking point in the summer months as overall demand collapsed at the height of the lockdown period.
Market watchers and experts are nevertheless projecting that demand rebound may finally take place next year, especially if Covid-19 vaccines will finally be set on full scale rollout.
The first half losses of Petron Corporation had been gigantic, but the company was able to trim that in the third quarter as the gradual reopening of the economy started to rev up fuel demand in the country.
As noted by Petron President and CEO Ramon S. Ang “while the oil industry continues to face major challenges, we are beginning to see signs of recovery,” and he credited that to the government’s resolve to “gradually and safely restart the economy.”
He expounded that with the company’s “judicious use of resources, we are determined to expedite our overall recovery, minimize the pandemic’s impact on our business and deliver more positive results.”
On the fate of the company’s refinery, Petron acknowledged that there are several tax issues that it already raised with the government, which may subsequently affect the viability and continued operations of its facility.
“Under the current regime, refiners are faced with the burden of paying so much more taxes than importers making it more difficult for us to preserve the viability of operating a refinery in the country,” Ang said.
Given its way, the Petron chief executive indicated that “we want to keep our refinery running and hopefully with the government’s support, we will be able to do this more efficiently.”