With prospects of economic rebound in the immediate term that will then shore up demand for fuel commodities in the domestic market, listed firm Pilipinas Shell Petroleum Corporation (PSPC) will be rolling out investments of P15 billion to P20 billion to underpin its growth strategy in the next five years.
Pilipinas Shell President and CEO Cesar G. Romero told reporters in a briefing that the yearly capital outlay will be P3 billion to P4.0 billion, which has always been congruous to the investment growth trajectory set out by the company even prior to the pummeling of the Covid-19 pandemic.
Top in the oil company’s investment lineup will be 60 to 80 mobility stations annually to beef up its retail network growth (a combination of new builds and enhancements); and two more medium-range (MR) import terminals which will be prospectively sited in Visayas and Mindanao; or even in the North (Luzon) area, depending on how fuel demand growth will shape up in the immediate term.
“In terms of investment, we are hoping that we will be able to continue with our investment profile of anywhere between P3.0 billion to P4 billion per year, so it’s just consistent,” Romero qualified.
Nevertheless, he stated that the differentiating factor is on target “to invest more in very profitable retail now called ‘mobility business’ and also to improve the efficiency of our supply chain.”
For the mobility stations or the retail portfolio of the company, the target will be 60-percent of the earmarked capital expenditures (capex), hence, that will be to the tune of P1.8 billion to P2.4 billion yearly.
On the blueprinted additional import facilities, Romero indicated that “based on what we know, it seems the projected greater economic growth will be in Visayas and Mindanao, so therefore, the next two import facilities are expected to be located there.”
He noted though that other areas in Luzon could also be an option, with him emphasizing “that does not mean that we will preclude any further investment in the north should growth be actually in the north. We actually follow where we believe the economic activity will go, so we are open-minded but we believe that five (5) is the good number to allow us to have a network of import facilities.”
The work-in-progress for the oil firm is the ongoing transformation of its Tabangao facility into a world-class import terminal, and according to the company chief executive, that will still command additional investment of P1.0 billion to P2.0 billion in the next three years.
“We continue to enhance Tabangao, so we still have continued investment there at at the moment. What we seriously identified is around P1.0 to P2.0 billion for the next three (3) years to really make it into a world-class import facility,” Romero expounded.
Reynaldo P. Abilo, chief finance officer of PSPC, said the five-year investment of the company can be fully concretized even without them resorting to fresh round of borrowings.
“Based on our internally generated funds, it’s most likely that we’ d be able to generate sufficient cash flow from operations to fund those investments. So far no need to borrow,” he stressed.
Romero added that when the company decided to shut down its refining operations last year, Pilipinas Shell actually gained leverage on re-channeling cash to other ventures that are value-adding opportunities to the firm’s business’ growth.
“Before when we had the refinery, we were spending as much as P1.0 billion per year just on asset integrity and basic maintenance. Whereas now, we will be spared of that value. We could re-deploy the capex to really value-adding investments — in terms of margin or revenue-generation or in terms of cost reduction,” he noted.